DOMINION MOTORS

& CONTROLS LTD.

SECTION D, GROUP 5:
AKSHAT GOYAL PARV PANDEY
ASHAR VARUN SANYAM JAIN
KRTIN JAIN SHIVALI
KHUNGAR
COMPANY BACKGROUND

• DMC manufactures motors, control panel board units and pumping

motors.
• Acquired over 50% of oil well pumping motors in Canada during 1973.
• The company has different product groups ranging from Control and
panel boards to 2000 hp motors. Company revenue of around $323m in
1984.
• The company has an excellent reputation for product quality
• 80% revenue from OEM and large industrial users, and 20% to
distributors for resales, primarily for small users
• Trade journals and catalogues – primary marketing methods
PROBLEM STATEMENT

Dominion Motors is in danger of losing its current market share in the

mine pumping engines after Hamilton Oil Company, ranked their
engines as the third choice after Spartan Motors Ltd and Universal
Motor Company of Canada.
HAMILTON FIELD TEST PROGRAM
• Hamilton, one of the biggest oil co. in region preformed a test on oil well motors.
• Headed by John Bridges (Hamilton’s Chief Electrical Engineer)
OBJECTIVE:
• To find the horsepower required to lift the fluid
• To find the maximum starting torque required to start the pumping units (at low winter temperatures)
FINDING:
• Fluid lifting requirements dictated a 3-5 hp torque
• Starting torque in excess of 70 pounds per feet
• This torque necessitates a 7.5 hp torque
CONCLUSION:
Spartan and Universal preferred ahead of DMC due to higher starting torque for 7.5 hp motors
 3600 ANALYSIS
Problem Situation Market Competito Factors
Analysis Analysis Analysis r Analysis Analysis

Headed by their Chief Power co.

Electrical Engineer John Average 1000
Sales mainly Spartan and changed power
Bridges Hamilton new wells
conducted tests to seasonal, over Universal rates from flat
determine the a) hp expected over
80% made from Motors major rates to
required to lift fluid b) next 5 years
max. torque to start apr-sept competitors graduated
pumping schedules.

In 1985, 850 of
As a result Forecasting in Demanded
5500 oil
DMC motors industry difficult companies that
producing Both had higher
were third in and co. had they stop over-
operational. torque in 7.5 hp
preference four alternatives motoring and
Major players segment.
which posed a to deal with the improve power
owned most oil
threat to sales problem factors.
fields.
ALTERNATE 1
Reduce the price of DMC’s 10-hp motor to that of the 7 ½ hp motor
Advantages:
• Can be implemented
immediately.
• Will counter Hamilton’s
endorsement of the Spartan
Motors.
• The oil market would become
rapidly active post the winter
slump, swift action will enable the
company to gain a competitive
advantage
Disadvantages:
• Not complying with power
companies’ directorate to maintain
low power factor.
• Losing out on higher margins
before market awareness of
Hamilton’s endorsements’.
• Bridges might rate Spartans as
better because of the higher torque.
• The solution seems viable for short
run but it will render ineffective in
the longer run.
ALTERNATE 2
Re-engineer DMC’s present 7½-hp motor to make its starting torque at least equal to
that of the Spartan 7½-hp unit.
Advantages:
• This option would enable DMC’s
motors to have the highest torque in
7½-hp motor segment that would
attract most oil companies.
• No additional investment required in
plant or equipment, so this is a cost
effective way to address Bridges’
problem
Disadvantages:
• Might lead to a torque war, which
could lead to unbalanced motors
design
• It will take 3 months to start. This way
company could lose out on sales
during the peak time for sales of
motors after the winter slump
• Exceeds NEMA Standards and could
lead to problems for the company in
the future.
ALTERNATE 3
Undertake design of a definite-purpose motor for the oil well pumping market. This
ideally would be a basic 5-hp motor with the starting torque of a 10-hp unit.

Advantages:
• DMC would be offering the market exactly what
it wants
• Competitive superiority leading to product
leadership
• Potential to Increase its market share to
approximately 60%
• Can offer a tactical advantage over competitors,
which is expected to last a long time.
Disadvantages:
• Around 4-5 months required to implement
• DMC would not be able to capitalize on the
seasonal sales
• Significant investment
• Economically difficult to justify small product
runs for special purpose motors.
ALTERNATE 4
Attempt to persuade Bridges and Hamilton executives that the conclusions reached
from their test results unduly emphasized obtaining the maximum starting torque
available.

Advantages:
• Clearing the misconceptions held by
Bridges. Bridges' findings were not
accurate and were conditional.
• If DMC’s testing prove the fallibility of the
premise for ranking, it will restore
confidence and reassure them that they
are getting the best of products.
Disadvantages:
• Ill would could be generated by any attempt
to alter his recommendations.
• DMC's intel is based on unofficial channels
and it might not be advisable to question
Bridges.
 RECOMMENDATION
On evaluating the various alternatives, our recommendation is alternative 3, to undertake
design of a definite purpose motor for the oil well pumping market. This ideally would be a 5 hp
motor with the starting torque of a 10 hp unit given the advantages presented.

• Alternate 1 is just a quick solution and will not be helpful in the long run. We also do not
know how the market will react to Bridge’s report.

• Alternate 2 violate NEMA specifications and could start a torque war which will not be good
for the industry and the company as well.

• Alternate 4 can be used to buy some time till production of definite purpose motors can be
started.
BREAK-EVEN

Price of definite-purpose motor (P): $1,045

Manufacturing cost (k): $665

Total Cost = Manufacturing cost + Transportation Cost + Sales commission =

$824.3

Investment (Fixed Cost): $75,000

Unit contribution = P – k = $1,045 - $824.3 = $221.7

Break-Even Volume = "Fixed Cost" /"Unit Contribution" = "$75,000" /"$221.7"= 340

units
THANK YOU