Dominion Motors & Controls, Ltd.

Brief
Key Problem

Hamilton, an Oil Well Pumping Company with a market share of 30% has performed some test
(because the power companies have revised their charges on the motor usage) on the torque
and horsepower required by the motor to lift the oil from well, even in very low temperature.
The test results put the DMC companies’ motors in a position of 3 in preference, after their
competitors Spartan and Universal. Now the question is whether DMC should do something or
not, if yes then what?

Solution
The DMC as per our opinion should reduce the prices of their 10 horsepower motor to the
prices of 7.5 horsepower motors of the other competitors, for this season, as the result of the
test will be finalized till may and the season for these motors is from April to September. The
salesperson of the company can then sell the motor easily for this season. And after the results
are finalized and if they are not in favor of DMC then they should re-engineer their 7.5
horsepower motor. As power consumption of the motor the 5 hp motor is too high to
economical feasible and for 10 hp motor there might be “overmotoring” charges by power
companies in the future. The cost of reengineered motor will be around 867$ to fit well in the
NEMA standards. The reduction in prices of 10 horsepower will increase the sales and market
share as the company already acquires 50 % market share. Also, DMC is the only company
which provides the control with the motors, so for this season this strategy should work.