Wind Technology Case Study

Situation Company 1. New company (10 years), abject comp ard to competitors 2. Cash work problems 3. Produces wind-profiling radio detection and ranging systems for weather forecasting and wind sensing 4. 9-12 months to advance funds flow Strengths 1. Adherence to specifications and quality production 2. proficient expertise raises full system integrationcustomers keep order any basic components or a full system 3. Meteorologists and atmospheric scientists nominate the customer with sophisticated support 4. All resources had been devoted to wind-profiling 5. Government contracts look for 90 portion of sales Weaknesses . Poor cash flow 2. need of a well-developed foodstuffing department 3. No salespersonsmanagement and engineers c entirely customers 4. No production capabilities to compete in high-volume, low-voltage segment 5. No resources and expert expertise to compete in high-output segment Opportunities 1. abstract Technology develops about all of its major com ponent parts and software, versus competitors who depends on a miscellanea of manufacturers. 2. HOWEVER, the development of the power supply has been problematic, SO Wind Technology unavoidably to develop power supply instead of purchasing an HVPS from outside provider 3.HVPS has greatest potential for commercial success Threats 1. Vaitra is unwilling to place superfluous money into Wind Technology 2. 9-12 months to implement new strategy and improve cash flow Product Sell component parts, specifically the high-power power supply (HVPS) 1. Small, with low level of output (less than 3kV) a. Communications 2. mediocre (between 3 and 10 kV) b. Radars and lasers 3. Large (greater than 10 kV) c. High-powered X rays and plasma-etching systems merchandise Total grocery store potential is estimated at $237 millionWind Technologys estimated commercialise share is 0. 5 percent, or $1. 185 million Finances Margin 30 percent (production=70 percent of selling price) or $355,500 Variable/ meliorate Costs Unknown Promotion Budget 10 percent or $118,500 Contribution Margin $237,000 Competition Unysisthe only key player in the wind profiling market Customers Research labs, large end-users, OEMs, and distributers Government Research, NASA, adduce colleges, Department of Defense Problem The market for wind profiling radar systems has been developing at a much lower rate than anticipated. Options 1. come in HVPS market, or ride out the two years (cutting cost) that the company had estimated it would take until the wind-profiling market achieved high growth levels? 2. If entrance HVPS market, establish target segment 3. If entering HVPS market, develop a barter and promotion plan Scenario 1 Enter HVPS market 1. The product provides a differential advantage, superior quality, is innovative, reliable, customizable, and technologically move 2. Provides an additional +/- $237,000 in contribution margin per every 0. 5 percent of market share is achieved. 3.HVPS could be pr oduced with very little added fixed costs & production would cost 70 percent of selling price. Scenario 2 Do non enter HVPS market 1. Young company in a vaned industry 2. Severe cash flow problems make it sticky to produce, market, and hold inventory 3. Development of power supply will ride out a problem 4. Difficult to cut costs when Wind Technologies already does non have a sales force or marketing department 5. Realistically only have 9-12 months before the company goes low Establishing target segmentRecommendations 1. Microwavehighest market growth and strength 2.Radarsecond highest growth and attractiveness, 3rd highest market share and strength 3. Semiconductorshighest attractiveness, 2nd highest market share Promotion Plan 1. Collateral Material a. 5,000 pieces * $5. 50 each(prenominal) = $27,500 2. Public Relations b. Cost to write and mail to editors = $500 c. are there hidden costs, such as publishing? d. How many passel actually subscribe to wind technology trade magazines (Exhibit 3 = 350,538 in circulation) e. Of the 350,000 in circulation, if 1% of subscribers actually read the PR= 3,500 reached 3. Direct position f. More effective than PR, because recipients have the material in heir workforce versus skipping over the page in a magazine. g. Buying list of prospects = $5,000 h. argon there lists available online? (Perhaps to solar day, but not in 1991 at the cartridge clip of the case) i. $7,500 per 1,500 mailed j. 3,000 mailed (universities, government) = $20,000 cost 4. Trade Shows k. $50,000 in costs + $50,000 for 5 staff members to view l. Reach has to be significantly less than PR and direct mail because of geographical constraintslimited to the number of interested populate near trade showmaybe 1,000-2,000 people attend trade show, and only 25% stop and look at your product m.Benefit repulse to see physical product and talk to experts n. BenefitPeople who attend the trade show are probably looking to purchase (50% are hobbyis ts, 25% looking to buy, 25% not interested at alltag alongs) i. 250 people see your product, +/- 50 are interested o. potential drop to cut costswhy does it cost $10,000 per person to attend? rate modern employees for +/- $3,500 per person (airfare, hotel, food). 5. Trade Journals p. Design News presents the best value, at just $0. 05 per page in circulation, it has a reach of 170,033 readers at a cost of $8,120 6. Personal Selling q.Telemarketing ii. Salary for employee would be $50,000 iii. 90 calls per day * 250 days = 22,500 per year, assume 75% are hang-ups = 5,625 actually talk on the phone, 5% are interested = approximately 250 r. Field Sales iv. Would provide most incremental revenue v. Most costly vi. $80,000 vii. However, this person can serve dual roles, also attending trade shows, responding to customer swear out issues, etc. Final Recommendation Kevin, from Wind Technology, acknowledges that it would be risky to act up with the HVPS spin-off, but not doing somethi ng to improve the firms cash flow was equally risky.Therefore, I would support neither decision, but instead go to the root of the problem which is Vaitras decision to cut funding for Wind Technology. Kevin needs to go to the management at Vaitra and ask for money to cut through sustaining the business for another two years. At that point, the industry is expected to mature and the high growth levels that they anticipate may be achieved. In the meantime, it is not worth it to restructure the business, and implement costly promotion strategies that may not even be effective during the two years which they are most needed.However, in two years, when Wind Technologies anticipates a more secure cash position, they can begin specializing in the HPVS, hiring personal sellers, and attending trade shows. Then, mayhap they can also pursue more than just 0. 5 percent of the market. That is, however, if they even need to do so it is possible that they will succeed with their current products . It would be best to have ample resources and do everything to the best of their abilities when the time is right, versus emptying their pockets just to get by in the industry, and abandoning their current strategy which could be successful in the very near future.