【正文】 price (or any other tangible factor) of your client’s racing product relative to its petition. It is not the product that is the problem, but rather its image. As your client came out with lower end, mainstream and children’s products and began to push their racing segment through mass distributors and discount outlets, their reputation was promised. Additionally, the presence of the racing products in the discount outlets has put your historic racing distributor (the specialty shops) in a precarious position. The specialty shops must now lower price to pete, thereby cutting their own profits. Instead, they are likely to push the petition’s product. Remember, your client has no direct salesforce at the retail outlets. The specialty shops essentially serve as your client’s sales force.The above analysis offers an explanation of what has affected the top side of the profitability problem. Still to be examined is the cost, or bottom side, of the profitability issue. Questions to uncover cost issues would include:q How does the client account for its costs?The client has a single manufacturing and assembly plant. They have separate lines in this facility to produce racing, mainstream and children’s products. They divide their costs into the following categories: labor, material and overhead. Overall costs have been increasing at a fairly hefty rate of 10% per year.q What is the current breakdown of costs along these categories for each product segment?Racing: Labor = 30%, Material = 40%, Overhead = 30%Mainstream: Labor = 25%, Material = 40%, Overhead = 35%Children’s: Labor = 25%, Material = 40%, Overhead = 35%q How has this mix of expenses changed over the past five years?In all segments, labor is an increasing percentage of the costs. q Does the basic approach to manufacturing (. the mix of labor and technology) reflect that of its petition?Your client tells you that there is a continuing movement to automate and utilize technology to improve efficiency throughout the industry, but it is his/her opinion that their approach, maintaining the “human touch”, is what differentiates them from the petition. (Unfortunately, he’s right!!)q Is the workforce unionized?Yesq What is the average age of the workforce?52 and climbing. There is very little turnover in the workforce.q What is the present throughput rating? How has it changed over the past five years?Presently the plant is producing at about 80% of capacity. This has been decreasing steadily over the last several years.q What is the typical reason for equipment shutdown?Emergency repairq Describe the preventive maintenance program in effect at the client’s facility?Preventive maintenance is performed informally based on the knowledge of senior technicians.q How often has equipment been replaced? Is this consistent with the original equipment manufacturer’s remendations?The client feels that most OEM remendations are very conservative. They have followed a philosophy of maximizing the life of their equipment and have generally doubled OEM remendations.The above information is sufficient to add some understanding to the cost side of the equation. Your client has an aging workforce and plant that is behind the times in terms of technology and innovation. This has contributed to excessive breakdowns, decreased throughput, increased labor rates (wages increase with seniority) and greater labor hours (overtime to fix broken machines).In proposing remendations to improve the client’s situation, there is no single correct approach. There are a number of approaches that might be explored and remended. The following are some possibilities:q Abandon the mainstream and children’s segment to recover leadership in the racing segmentIssues to consider in this approach:216。Firm: . KearneyCase Number:Case setup (facts offered by interviewer):q Your client is a manufacturer of bicyclesq They have been in business for 25 yearsq They manufacturer and sell three categories of bicycles:216。 How much of the racing segment is “recoverable”?216。 How will this move affect overall utilization of the operating facilities?q Maintain the mainstream and children’s segment, but sell under a different nameIssues to consider in this approach:216。 What is driving the buying habits of the mainstream and children’s market?q Reduce costs through automation and innovationIssues to be considered:216。 How will these investments affect throughput?216。 If layoffs are required to achieve the benefits, what impact will this have on labor relations?q Reduce costs through establishing a formal preventive maintenance programIssues to be considered:216。 What technical or system changes are required?216。 Today they make up approximately 20% of the overall cookie market (., there has been a steady, linear increase of private label portion of the overall cookie market during the past five years)216。 A collection of small outfits, that make both branded cookies and supply private labelersq Distribution occurs primarily through one of two types of outlets:216。 Gain maximum product knowledge as quickly as possible216。 Joint advertising and promotionsq Explore deals with mass merchandisers to enter private labels (remember, mass merchandisers presently sell no private label)If the threat is seen as low, the likely remendation is for your client to stay with branded cookies only. The candidate should recognize that in peting in the branded segment the basis of petition is one of differentiation. Additionally, your client should do all it can to halt or reverse the momentum of the private label segment. The following tactics might prove useful:q Pursue a maximum differentiation strategy216。 Customers who buy private labels are the most price sensitive. They also tend to be the least loyal customers and spend less per store visit.216。 Contractors are a group of outside Supervis