Cumberland Metal Industries Case Study
Cumberland Metal Industries: Engineered Products Division, 1980
Overview:
Cumberland Metal Industries (CMI) is one of the largest manufacturers of curled metal products in the U.S. The company started the business by making highly technical applications, but soon changed from selling the finished products to selling the products that were considered as raw materials for other products. By doing so, the company experienced a dramatic growth in the 1970’s and occupied 80% of the market share. However, the managers were not sanguine about the future since there was a slightly decrease in sales and net income in 1979. Therefore, the company developed a new cushion pad to boost company’s revenue. The performance of the new product was really impressive in the test and the test company Colerick was eager to make the purchase. The only problem left is to decide what price should the company charge for the new product, and it is a decision case.
Product: The cushion pad is used in the driving piles. It is used to prevent damages caused to the hammer and the piles when the machine is working, while also transform the energy from the hammer to the pile. Normally, people use hardwood as cushion pads, and then changed to asbestos pads. However, the new cushion pad is better than these two because it can stretch in both length and width to provide more resilience, and also effectively transmit the force power without changing the power to heat or other mechanics.
Market: Based on a report by Construction Engineering magazine, the manager Simpson estimated that there were 19500 to 26000 hammers operating about 25 weeks per year, and for each week, the hammers would be used for 30 hours. Then he made further assumption that the average actual driving figure for most jobs was 20 feet per hour. After calculation, the total amount of piles driven per year is between 290000000 and 390000000, which I assumed to be 340000000 for easy calculation. Another factor is that a set
Overview:
Cumberland Metal Industries (CMI) is one of the largest manufacturers of curled metal products in the U.S. The company started the business by making highly technical applications, but soon changed from selling the finished products to selling the products that were considered as raw materials for other products. By doing so, the company experienced a dramatic growth in the 1970’s and occupied 80% of the market share. However, the managers were not sanguine about the future since there was a slightly decrease in sales and net income in 1979. Therefore, the company developed a new cushion pad to boost company’s revenue. The performance of the new product was really impressive in the test and the test company Colerick was eager to make the purchase. The only problem left is to decide what price should the company charge for the new product, and it is a decision case.
Product: The cushion pad is used in the driving piles. It is used to prevent damages caused to the hammer and the piles when the machine is working, while also transform the energy from the hammer to the pile. Normally, people use hardwood as cushion pads, and then changed to asbestos pads. However, the new cushion pad is better than these two because it can stretch in both length and width to provide more resilience, and also effectively transmit the force power without changing the power to heat or other mechanics.
Market: Based on a report by Construction Engineering magazine, the manager Simpson estimated that there were 19500 to 26000 hammers operating about 25 weeks per year, and for each week, the hammers would be used for 30 hours. Then he made further assumption that the average actual driving figure for most jobs was 20 feet per hour. After calculation, the total amount of piles driven per year is between 290000000 and 390000000, which I assumed to be 340000000 for easy calculation. Another factor is that a set