Standard Machine

Corporation – Case
Analysis
SUBMITTED BY GROUP 10 (B2B – 1)
AMAN JAIN - 024006
PARICHITA RAGHAV - 024033
PULKIT DHANAVA - 024036
RONIT GUHA ROY - 024042
Important Facts
 Standard Machine Corporation (SMC) is an leading manufacturer of machine tool equipment –
milling, grinding & boring machines

 SMC’s one of the key accounts/ customer is Occidental Aerospace

 Occidental is planning to procure new computerized milling machine for its new training centre

 Procurement process is in line with new competitive bidding policy – for cost cutting by looking at
other suppliers at lower price

 SMC’s key competitors have bid less than its bid price of $ 429,000 – Kakuchi (under $ 390,000)
and Akita Limited (little over $ 400,000)
Key Issues
 Occidental expecting bid price reduction by $ 22,000 from SMC

 SMC follows fixed price policy

 Scott Palmer from SMC proposes an idea of bid price reduction to $ 407,000 in lieu of potential
future business from Occidental for its planned 2 new plants

 The idea gets shot down by his Regional Manager (Tony Della Pena), since as per him, high price
compared to competitors reflects high product quality, less shipping & delivery time, investment in
R&D and after sales services in terms of installation & training to operators

 Also, as per Tony, reduction in price may reduce its benchmark price in the industry, and other
customers may also demand same kind of reduction
Competitive analysis

Company Strength Weakness

Kakuchi • Lowest Bidder • Complicated software
• Unsatisfactory reviews from
European customers in terms of field
services
Akita Limited • Price competitive • Doesn’t have customers as big as
• Good software package (A71) Occidental
• Good services due to U.S based field • Limitation in case of capacity
centres enhancement, since more time will be
required for supplying equipment and
training
Way forward for Scott
 Highlight Favourable Points of Differences value proposition to Occidental on the basis of following
points in order to defend original bid price of $ 429,000-

(i) 20+ years of business relationship which includes supplying of various kinds of machining tools
with superior quality
(ii) Minimum shipping & delivery timelines
(iii) Supportive to customer’s plan in case of capacity enhancement
(iv) High quality of after sales services in terms of faster installation and training to operators
(v) High switching cost that might occur in case of incorporation of new systems from a new vendor
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