Priyam Miteshbhai Patel 

  (20190201097)
BBA-IV  Sec-A
Production & Operation Management Assignment
 
Ans 1: The company objectives and IFG segment objectives align well with the
Lena product. Pintura Corporation, as a whole, has an explicit goal of producing
more environmentally friendly products. Powder-based coatings are significantly
more environmentally-friendly than the current highest-selling type of coating,
solvent-based coatings. Also, the powder-based coatings are more energy-
efficient than the water-based coatings, the other environmentally friendly option
offered by Pintura. IFG has an explicit goal of increasing revenue by 5% annually,
and Lena contributes to this goal through its high contribution margin of 42% and
by increasing market share over time, through gaining new customers and
stealing share from competitors.
The GIC segment includes manufactures that used coating during the production
of finished goods. The global market for the GIC segment was about $24 billion
annually, US manufacturers held approximately 25% of this market. IFG sold GICs
directly to large manufacturers and indirectly through industrial distributors,
which then resold  to small and medium sized manufacturers. IFG was responsible
for most of Pintura’s research and development, which focused primarily on
innovation in GICs, often leading to new product variation that CPG and PI sold
into the respective markets.
The customer group that has been identified with the most potential for the Lena
product is the wood segment of the end-user substrate groups. This segment is
comprised of the furniture, flooring, cabinetry, and other wood furnishings. The
flooring and cabinetry segments are focused on durability and cost-effectiveness,
while the furniture and other furnishings segments are focused on aesthetics and
differentiation. Lena can meet the needs of both segments by reducing product
waste in the application, which reduces costs, and by improving the aesthetic
differentiation of products by elevating the quality of beautiful hardwoods and
masking the imperfections of lower quality woods. The versatility of the product is
another commercial advantage.

STP Currently, customer segments are furniture (30%), flooring

(25%), cabinetry(20%), and other wood products (25%). Lopez estimated that 20%
of IFG’s total sales to flooring and cabinetry customers would switch to power
based coatings, 60% and 40% of furniture and other wood products would switch
from water-based and solvent-based coatings respectively to powder-based
coatings.
 
Branding It is being considered that Lena would cannibalize the existing products
sales and that switching from solvent-based to water-based coatings is a safer
approach. But, Lopez has estimated a 5% increase in sales to furniture and
other wood products and a 1%increase in sales to flooring and cabinetry customers
for next 5 years annually.
 
Price  Solvent-based coating’s price is $28/unit and COGS of $14.28. Water-based
coating’s price is $34/unit and COGS of $21.08. Lopez has decided to price Lena
at $38/unit and COGS of $22.04. The pricing has to take into account the
customers who have UV curing equipments and who do not. But, it is being
believed that reduced energy and pollution would pay for the extra investments
within a few months.

Channels of Distribution It is being proposed that Lena would be a profitable

product therefore can be sold directly to manufacturers through the in-house sales
force and indirectly through a network of independent distributors. Distributors
account for 51% of all sales from wood coatings, with flooring for 65% and
cabinetry customers for 70% but they charged 21% selling and fulfillment fee for
IFG’s products.

Communication The overall goal is to meet or exceed the sales forecasts by the

end of the year. The allocations are as follows Sales force ($500,000), Distributor
($700,000), Advertising (600,000), Publicity ($500,000) and Electronic Media
($700,000).

Ans:2
The Launch of the Lena product is exactly what Pintura needs to get a significant 
lead over possible competitors because of the strict state and local regulations that
monitored  environmental pollution, solvents were viewed as toxic chemicals that
would cause air pollution that  required special pollution-controlled devices. Given
the fact that Lena is environmental friendly and  complied with regulations, it did
not emit pollutants such as the VOCs typically associated with solvent-based
liquids. Unless Pintura decides to make changes to its existing products which
would have to  follow state and federal regulations by making it safe for the
environment as well as the workplace by eliminating toxic chemicals and
maintaining its brand name.  It is being considered that Lena would cannibalize the
existing products sales and that switching from solvent-based to water-based
coatings is a safer approach. But, Lopez has estimated a 5% increase in sales to
furniture and other wood products and a 1%increase in sales to flooring and
cabinetry customers for next 5 years annually.
Introducing the Lena product to a much smaller market segment would almost 
certainly not help Pintura achieve its 5% targeted annual revenue growth because
of the nationwide network of 3,100 distributors across the nation, IFG should sell
through a more extensive network in  order to achieve sales objectives. Given
that distributors accounted for 51% of all sales on coatings  along with the 65% of
flooring and 70% within the cabinetry segment. Unless Pintura decides to launch
the Lena product to a nationwide network of distributors, there is no way the
Lena product would  succeed with the smaller market and achieve its
sales objective. 
Pintura should proceed to launch Lena into the nationwide domestic market. In
order to maximize profit and achieve sales growth as well as meeting
regulations, Pintura should launch the Lena product nationwide and target
customers who use wood coatings. This  group should include cabinetry,
furniture, and flooring. Upon successful launch of Lena, Pintura could  surely have
the competitive edge in the market based on revenue estimates from the team.
With a mainstream approach there is the possibility of new and
existing customers eventually shifting to the Lena product before competition hits
the market because EPA  regulationsmonitored environmental pollution that was
caused by toxic chemicals found in solvent-based coatings, Lena is the ideal
product that met regulations and did not emit pollutants associated with solvent-
based coatings. Given that many firms viewed environmentally friendly products
as the catalyst for market growth and improved profitability, Pintura has nothing
to lose by proceeding with the Lena launch and meeting its annual growth. 
The successful launch of Lena would surely help Pintura’soverall image and
improve the companies’ profitability by increasing operational efficiency, product
utilization, and product flexibility as well as decreasing the defect rates. IFG has
shown leadership in their area through its success in the water-based coatings
area based on the results of a significant survey of executives. Lena could help
IFG, and thus the whole company, establish market leadership in environmentally
friendly products in another major coating area. 
Also, powder-based products have superior durability, attractiveness, and quality.
These characteristics are important because the consumers value quality,
reliability, and consistency from their coatings, so the product strengths are
reflective of consumer concerns. Launching Lena would give IFG a first-mover
advantage in the powder-coating market for hardwoods, as it is a unique
patented formula.
 
 

Ans:3
An executive from another division of Pintura: PinturaCorporation, as a whole,
has an explicit goal of producing more environmentally friendly products.
Powder-based coatings are significantly more environmentally-friendly than the
current highest-selling type of coating, solvent-based coatings. Also, the powder-
based coatings are more energy-efficient than the water-based coatings, the
other environmentally friendly option offered by Pintura. IFG has an explicit goal
of increasing revenue by 5% annually, and Lena contributes to this goal through
its high contribution margin of 42% and by increasing market share over time,
through gaining new customers and stealing share from competitors (Exhibit 2 &
3).
I would Recommend that the company follow their research and design carefully
because the company is not certain about the performance of the solvent-based
coatings. However, the new product have improved the company’s
performance and profitability by increasing operational efficiency, product
flexibility, product utilization and decreased defect rates.
An independent distributor: Launch Lena to relatively smaller markets targeting
could help improve customer relation. The market has shown positive reception of
the products as evidence by the increase in sales volume of the company. However,
they are not doing enough to promote their product by using proper materials and
precision machines. This is because their product can only be used with specific
internal strength and moisture content could be used, due to limitation with the
heating and cooling of MDF during the powering process. If the company can
adapt effective promotional strategies, it would ease the promotional burden from
the distributers. 
An IFG salesperson: The IFG division of the company contributed to 25% of the
total sales of Pintura Corporation and it sold the coatings, paints and the related
products to the commercial and industrial customers in US. IFG was the one, that
had developed the water based coatings recently and it had grown its share of
revenue from wood coatings to 47.5%. overall, the IFG division acquired a much
stronger position relative to the other two division of the company. Its contribution
to total company sales was lower than other divisions so it is time to increase its
share of revenue by considering the launch of Lena. The objective would increase
the sales of the IFG division by 5% annual growth rate. Secondly, the executive
team of Pintura was highly committed to the development of the environment
friendly products because of the concerns of the customers regarding Thevolatile
organic compounds and the other pollutants. Therefore, the strategy of IFG was to
capitalize on this and develop a new technical product that is more
environmentally friendly for the customers of the company. GIC was the first one
to shift its strategy for producing the water based and powder based coatings
segment and it was the strategy of IFG to move with the market as it was launching
new products for IFG to meet the tightening environmental regulations and shift in
the customer demand.