Atlas Inc. and Mid-west Energy Marketing the Medium-Speed Drivetrain Gearbox

The purpose of this Case is to facilitate student learning related to marketing strategy formulation and implementation. Firms featured in this Case are fictitious. Materials in this Case were developed using many publicly available resources. Exemplar sources (not an exhaustive list) include: (a) https://www.energy.gov/Links to an external site.; (b) American Wind Energy Association (AWEA); and (c) Links to an external site.www.wikipedia.org

Questions are below 1-10. Some are multiple choice others are in short bullet point essay-form.

Background

Wind energy is one of the leading sources of alternative energy. It involves generating electricity using the air flows that occur naturally in the earth's atmosphere. Wind turbines are used to harness the power of wind and convert it into electricity. Wind turns the propeller-like blades of a turbine around a rotor, which spins a generator, which creates electricity. Wind energy offers many advantages such as cost-effectiveness and sustainability. Further, wind is a clean and domestic energy source that can be harvested using turbines that can be built on existing farms or ranches.

The United States is one of the fastest growingwind energy markets

Intrigued by the novel product design and the efficiency claims made by Atlas, the buying group at Mid-west asked Ms. Nelson to show comparative data that highlights how their new product performs in comparison to the conventional one (from Reliable Corp.) they currently use.

Reliable Corp. and The Technical Challenge

Mid-west energy currently buys the gearbox used in their windmills from a local supplier named Reliable Corp based in Ames, IA. Mid-west has been doing business with Reliable for over six years now. Mid-west is a key (strategic) account for Reliable Corp. and their key account management team has built strong relationships across the board within Mid-west purchasing organization. According to Mid-west purchasing group, Reliable offers a low-priced product. Further, being local, they can sell direct to Mid-west and deliver the product anywhere in Iowa within five hours.

For the past year, Mid-west Energy has been experiencing technical issues with their gearboxes. Specifically, they have heard from their field technicians that the gearboxes supplied by Reliable seem to be malfunctioning leading to periodic breakdowns. Such breakdowns are undesirable since they entail costly repairs. Further, a windmill downtime translates into lost revenue for the company (when the windmill is not functional, it is not generating electricity that Mid-west can sell).

Over the past few months, Mid-west and Reliable have discussed the technical issues. While Reliable has assured their customer that they are looking into the matter, Mid-west has not heard of any concrete plans from Reliable regarding how they plan to resolve this issue.

Atlas Inc.- The New Supplier

The central purchasing group at Mid-west consists of four individuals: head of purchasing, head of finance, chief engineer, and head of R&D. This group is responsible for making all large purchasing decisions for windmill parts and they work collectively as a buying center for Mid-west.

About two months ago, this group was approached by Ms. Linda Nelson, a newly hired salesperson from Atlas Inc., a MN-based manufacturer of the next-generation (Medium-speed) gearboxes. Linda knows that Mid-west is Reliable Corp.'s key account, and she wants to make inroads into this account.

During their initial meeting, Linda talked about how Atlas uses advanced manufacturing processes to make gearbox components that are not only more efficient and but also reliable. She also shared that Atlas' manufacturing process has 30% less carbon footprint compared to the ones used by companies such as Reliable. During the subsequent meetings, she provided them with technical data and detailed product specs.

The Figure below shows how Atlas' gearbox (left) is different than the one currently used by Mid-west (right).

3rd Gearbox High High Speed Medium Stage Speed Generator Speed 1st Gearbox Shaft Generator Stage Power Electronics Rotor Stator Stator Power Electronics Single Stage Gearbox with 2nd Gearbox Hydrodynamic To Collection Stage To Collection System Transformer Bearings System Transformer