Professional Documents
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Standard Machine Corporation
Standard Machine Corporation
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
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
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
(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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