Executive SummaryThe report addresses the strategy to employ to ensure sustainable profitability. Issues we are facing are price rigidity from our management, declining profit abilities, Occupancy of our new plant and growing competition in the German market. The options to resolve them were to either reduce the mark-up for the Konig order or Quote the full mark-up. They are evaluated on the basis of Returns, probability of the maximum returns, FirmÃÂs reputation in the market and Impact on future businesses. On these bases , I recommended to reduce the mark-up for the Konig bid. The actions to undertake are also discussed in the report .
[Word Count: 104]Situational AnalysisKonig accounts for more than 80 percent of sales in Germany, which is the largest market for us in Europe. Till date the sales we have made to Konig were consisting of full mark-up cost. However, the present bid is only for the purpose of the training.
Hence, our unique sales features like Accuracy and Flexibility are getting redundant here. It implies that we are not competing on Superior quality, which always has been our prime focus. The pressing issue here is that our management is not keen to compete on the cost. It is plain that the management insistence on maintaining mark-up is due to fall in Profit before tax revenue of the company. Also, being a market leader, we do not need to be the lowest bidder to win the contract.
The Frankfurt plan is expected to start in the middle of this September. The issue to be addressed is the occupancy of the plant after it is opened. In case we do not win this bid, the plant will be idle for two to three months. The plant overheads are approximately $600,000 annually. This means that there would...