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Wilkerson Case What is the competitive situation faced by Wilkerson?

Wilkerson Case

What is the competitive situation faced by Wilkerson?

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Expert Solution

In the Wilkerson Case the competitive situation faced by Wilkerson is described as below :

The competitive situation is different between the products.

Pumps are commodity products, produced in high volumes for a market with high price competition price cutting by competitors led to a drop of Wilkerson’s pre-tax margin tounder 3%, gross margin on sales for pump sales has fallen below 20%.

Flow controllers are customized products, sold in a less competitive market with inelasticdemand at the current price range.

Valves are standard, produced and shipped in large lots - gross margins have been maintainedat 35%.

Wilkerson is a quality leader, but this leadership may soon be contested by severalcompetitors. Although they are able to match Wilkerson's quality, there are no signs of pricecompetition yet. Nevertheless, in the long-run Wilkerson should be prepared to compete on price. The price competition pushes Wilkerson to analyze its overhead costs, since no reservesof cost cutting are left in its supply chain (both customer and suppliers agreed to just-in-time delivery)

ekkarill92 answered 2 years ago
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