Question
Peterson Instruments products can be grouped into two main lines of business: electric meters (EM) and electronic instruments (EI). Both products are industrial measuring instruments
Peterson Instruments products can be grouped into two main lines of business: electric meters (EM) and electronic instruments (EI). Both products are industrial measuring instruments and perform similar functions. However, these products differ in their manufacturing technology and their end use characteristics. EM is based on mechanical and electrical technology, whereas EI is based on microchip technology. Additional information concerning the two products is provided below. Overall market (units) Electric meters (EM) Electronic Instruments (EI) Planned 350000 150000 Actual 280000 200000 Petersons market share: Planned 15% 10% Actual 10% 15% Petersons selling prices (per unit): Planned $35 $120 Actual $20 $100 Petersons contribution margin (per unit): Planned $20 $60 Actual $ 3 $50 Average industry selling price: Actual $40* $130** Petersons variable costs (per unit): Standard $15 $60 Actual $17 $50 Average industry costs: Actual $15 $55 Product/market characteristics Mature Evolving Lower level technology Higher level technology Variance analysis Electric Meters(EM): Market size Market share Sales price M/f cost $210,000U $280000U $420,000U $56,000U Electronic Instruments(EI): Market size Market share Sales price M/f cost $300,000F $600,000F $600,000U $300,000F
Required:
(a) Classify the two products (electric meters and electric instruments) using the BCG matrix, and discuss the strategy that should be adopted for each product?[NB You can use any of the strategic frameworks to discuss your answer.] (4 marks)
(b) Critically evaluate the performance of Peterson Instruments in respect to the two products
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