What should be done with regard to the earthmoving line

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Reference no: EM13228177

Fleury Equipment is a French company with roots going back to before the Second World War. For a variety of reasons both internal and external, Fleury's financial and market standings have fallen to such levels that bankruptcy is definitely a possibility. At the last moment, an opportunity has arisen that has the potential to return the company to first tier status in its industry and to significantly improve its financial condition.

If Fleury chooses to pursue this path, issues with regard to pricing the new product and marketing the new product both have to be considered. A number of other issues are raised by the proposal which allow for discussion of globalization, the European Union, failed management, and outsourcing.

The case offers opportunity to stimulate discussion on issues raised by global competition, the EU and its expansion to Eastern Europe, the impact of trade barriers and their elimination on competition.

1. To help students understand the factors involved in pricing a new technologically improved product added to an existing product line. It also allows for the discussion of how the price of the new product may influence prices on existing products and vice versa.

2. To generate discussion of globalization issues not only on the competitive environment, but also on the opportunities to link up with foreign organizations to improve a product. Issues relating to outsourcing manufacturing and other functions may also be discussed.

3. To generate speculation and discussion on how a company once seen as top-of-the-line has fallen to second-rate status in the eyes of its market.

Preparation Questions

1. Why has Fleury declined from being a leading, high- quality manufacturer to being a second-tier one on the verge of bankruptcy?

a. Why were they so successful in the aftermath of the Second World War and well into the 1950s?

b. What internal and external factors led to the decline over the last three decades of the 20^th century?

The discussion of the first question should naturally lead to:

2. What is the impact of globalization on:

a. Competition

b. Labor markets

c. Trade and trade barriers

d. Outsourcing: What can be outsourced? What cannot be outsourced?

3. Three suggestions are made in the case to reduce costs. Evaluate each of these.

4. How should Jacques respond to Deleuze's "Israeli" proposal?

a. How should the product be priced?

b. What does acceptance of this proposal mean for the pricing of current lift products? For these products' future?

5. What should be done with regard to the earthmoving line?

6. How can sufficient levels of cash be generated to satisfy the bank and to promote the new product?

7. Will the market believe the new level of quality and productivity claimed by Fleury for the new product? What actions should Fleury take to help potential customers to see the advantages of the new product?

Reference no: EM13228177

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