The current situation of our company
Table 1 the comparison between North American and European market
| lead times
| North American
| significantly more competitive
| More price-sensitive
| Pressure on price
The characteristics of its marketing
1 two major market areas: The first was to supply products of a type similar to our current electromechanical designs to North American aircraft manufacturers. The second was to design and manufacture electronic products for Europe and North America. 2 time was pressing. the lead time between contracts being signed and initial deliveries got increasingly shorter. 3 The U.S. market (dual sourcing) is already served by four large companies, all U.S.-based, with sound experience and highly competitive. the volume provides for low-cost manufacturing. With dual sourcing, delivering on time is now even more important, as failure would directly affect our supplier rating and hence future sales. 4 merit: There are not many European suppliers who have an electronics capability—in terms of design through to manufacture, so less competitors. Our decision to go into electronics was almost preordained. Margins on electronic products were similar to existing OE contracts.
| electromechanical business
| OE Requirements
| Spares and repairs
| No growth
From table 2,
1For electronic products, it has large market in the future. The market is potentially very large with apparent high profit margins at least at the early stages. What is more, there are not many European suppliers who have an electronics capability—in terms of design through to manufacture, so less competitors we have. Orders are won at this time on the technical merits of the product, not on price. Therefore, decision to go into electronics was almost preordained for Clifton. According to the information described above, to produce goods at a cost lower than other companies is not the basis of competing in the North American market. Innovation and delivery are the attributes. 2For OE Requirements, Recent growth is expected to level off and the market is likely to be nearly zero in the future. Intensive competition from North American aircraft manufacturers will result in reducing market prices. This is beginning to lead to some price-cutting at the component supplies level. Delivery reliability is becoming increasingly important, because penalty clauses are included in certain contracts. 3 For Spares and repairs， the demand for spares and repairs is expected to decline, but margins are high. Delivery is generally required within 30 days of order, and this is usually achieved by holding inventory. Delivering on time is important. 4For electromechanical business, it has huge volume. But competition is intensive and price is always the most important order-winning criterion. To sum up, for electromechanical business, traditional costing system is suitable for its production. This product is competing on the basis of price and cost. Its manufacturing should be evaluated on performance measurement of cost, efficiency and productivity. In other words, its manufacturing is expected to be at minimum cost. However, for other three products, delivering is the common important attribute; consequently, non-financial performance measures should be created.
As this article mentioned, North American market is significantly more competitive than its European equivalent. So for making sure that Clifton remains competitive after entering North American market, a measurement system needs to be created to measure its operational performance. In such way, Clifton can know how it performs and its employees will be motivated to perform batter, since they know they are...
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