Dominion

Problem:

Dominion Motors & Controls Ltd. has had a relatively stable and significant holding in the market for Oil Pumping in Northern Canada through the early 1980s. However, recent field tests have yielded results regarding the favored features of a popular pump that would place Dominion in third overall within the competing market providing such pumps. In effect, Dominion must act quickly if they plan on preventing the loss of their current hold on the market.

Possible Solutions:

1. The simplest solution would be to readjust the price of their currently popular and powerful 10-hp motor to that of a 7.5-hp motor. This would place a more powerful motor in competition with the smaller ones. Such a solution would be a relatively successful short term solution to the dilemma. Unfortunately, profits would be reduced since the 10-hp motor costs close to two-hundred dollars more that the 7.5-hp motor. Furthermore, profits would be reduced by around six-hundred dollars per unit. While this plan can be implemented immediately, it doesn't maximize materials or leave much room for improvement in the future, besides completely altering the product.

2. A second solution would be to reengineer Dominion's current 7.5-hp model in order to make it more appealing to customers following the release of the new field reports. This would entail altering the model in one of two ways. The motor can be kept at the same size, but the addition of more power would cause the generation of more heat. Although this heat can then be insulated further, it will still exceed the standard temperatures set by NEMA. The other alteration would be to make to the frame bigger in order to provide room for a larger motor necessary for greater torque. While this larger size is also not the top choice of users, it would be preferred over the heat issues associated with the first proposed change. Unfortunately, this reengineering would result in a two-hundred dollar increase in manufacturing costs.

3. Lastly, Dominion can opt to develop a completely new model which would be perfectly suited to fit the new standards. This process would obviously be more costly than the other choices, yet it may prove to be more profitable in the end. Research and development for such a product would cost around seventy-five thousand dollars. This project would yield a product greatly desired by the oil well market in northern Canada. The addition of this product to Dominion's current line would give them a definite