BRAND PIPE COMPANY

GROUP A1
NITISH VARSHNEY || SAMAAKHYA P || CHETNA DHINGRA || KAMAL
BAHETEY || MANZIL CHAKRABORTY || SAYAN PAL || ARNAB
BARDHAN

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 ISSUES
Objective – To come up with a specific marketing strategy so as to stop the
losses and provide a base for sustainable growth in future.
 Pricing issues –
 To eliminate competition the prices were reduced to a great extent, which left
them without any margins for a sustainable growth.
 Distributors (20% of accounts contribute to 75% of gross revenue) are
unhappy due to volatile prices
 Prices are similar to regional suppliers
 Fight for market share – Tamarac venturing into agricultural market and Sierra
into conduit market
 Large firms which are well financed and experiencing losses, struggle to gain
market share
 Staffing Issues –
 Mr Buford is responsible for both general management and sales
 Plant engg. Is not able to reduce cost due to substantial work load
 30 – 40% overcapacity was purchased, but plant is not fully utilised
 Logistics – shipping costs accounted for 15% of SP, each competitor had
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 ANALYSIS
Private Portable Water
Agricultural Irrigation(PVC) Mobile Home Market(ABS) Public Potable (PVC) Industrial Market (PVC) Gas Transportation (ABS)
System Market(PVC)
Washington Region Washington Region Washington Region Washington Region Washington Region Washington Region
Market Market Market Market Market Market Market Market Market Market Market Market
8250000 16500000 145000 350000 130000 1400000 2000000 5000000 600000 1000000 123000 300000
Growth 3.20% 3.20% 0.00% 0.00% 13.70% 11.80% 14.90% 14.90% 7.70% 7.70% 0.00% 0.00%
Year 1 8514000 17028000 145000 350000 147810 1591800 2298000 5745000 646200 1077000 123000 300000
Year 2 8786448 17572896 145000 350000 168059.97
1809876.6 2640402 6601005 695957.4 1159929 123000 300000
18135228.6 2057829.69 7584554.74 1249243.5
Year 3 9067614.336 145000 350000 191084.1859 3033821.898 749546.1198 123000 300000
7 4 5 33
18715555.9 2339752.36 1345435.2
Year 4 9357777.995 145000 350000 217262.7194 3485861.36 8714653.4 807261.171 123000 300000
9 2 9
19314453.7 2660298.43 10013136.7 1449033.8
Year5 9657226.891 145000 350000 247027.7119 4005254.704 869420.2812 123000 300000
8 6 6 02
90766134.4 10459557.0 38658349.9 6280641.6 1500000.0
Total 45383067.22 725000.00 1750000.00 971244.59 15463339.96 3,768,384.97 615000.00
4 9 1 2 0

Drain Waste & Vent (ABS Sewer And Outside Drain Water Well Service And
Turf Irrigation Market (PVC) Conduit (Styrene)
-90%/ PVC- 10%) (Styrene/PVC) Stock Water (PVC/Poly)
Washington Region Washington Region Washington Region
Washington Region Washington Region
Market Market Market Market Market Market
3000000 5900000 120000 210000 465000 1000000 1400000 2800000 400000 900000
Growth 10.70% 9.50% 4.90% 6.20% 11.80% 8.40% 13.69% 12.22% 0.00% 0.00%
Year 1 3321000 6460500 125880 223020 519870 1084000 1591660 3142160 400000 900000
Year 2 3676347 7074248 132048.1 236847.2 581214.7 1175056 1809558.254 3526131.952 400000 900000
Year 3 4069716.129 7746301.013 138518.4779 251531.7689 649797.9899 1273760.704 2057286.779 3957025.277 400000 900000
Year 4 4505175.75 8482199.61 145305.883 267126.739 726474.153 1380756.6 2338929.339 4440573.765 400000 900000
Year 5 4987229.561 9288008.572 152425.8716 283688.5963 812198.1027 1496740.158 2659128.766 4983211.879 400000 900000
Total 20559468.44 39051256.69 694178.35 1262214.34 3289554.91 6410313.47 10456563.14 20049102.87 400000.00 900000.00

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 ANALYSIS
Poly PVC ABS Styrene
Current Market Size
35360000 Quantity 450000 3871000 769000 1032000
GSP 0.3625 0.276 0.3648 0.2762
Current Market size in $ Disc/Freight 0.071 0.0138 0.0378 0.0377
9193600
Less Disc/Freight 131175 1014976 251463 246132 1643746
Current Revenue of Brand Pipe 1800000 Op. Cost 137250 863233 260844.8 217752
Op. Margin -6075 151743.2 -9381.8 28380
Fixed Cost 17865 145162.5 38526.9 32404.8 233959.2
Market Share by Percentage
0.195788375 Profit -23940 6580.7 -47908.7 -4024.8 -69292.8
Current Production 6122000

Yr 5 total mkt size 51038571.98 Current Capacity 10203333.3

Excess Capacity 4081333

Year 5 Market Share 9992759.047

Growth in Market Size(Vol)

15678571.98
If ABS & Poly production is stopped
Growth in Mkt Size(%)
44%
Expected current production 4903000
Growth in capacity required for Brand Current Capacity 10203333.3
Pipe Excess Capacity 5300333.33
3069682.124 Total capacity required in 5 years 7972682.12

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 INEFFICIENCIES IN PRODUCTION
• Unnecessary changeover to reduce inventory
• Excess wastage of costly raw materials
Poly PVC ABS Styrene
Quantity 450000 3871000 769000 1032000
GSP 0.3625 0.276 0.3648 0.2762
Disc/Freight 0.071 0.0138 0.0378 0.0377
Less Disc/Freight 131175 1014976 251463 246132
124053. 771934. 236452. 194278.
Op. Cost 6 2 6 8
7121.40 15010.3 51853.1
Op. Margin 1 243042 7 9
145162.
Fixed Cost 17865 5 38526.9 32404.8
97879.5 19448.3
Profit -10743.6 3 -23516.5 9

Changeover cost/ day 175 $

Annual changeover cost 52500 $
Annual production quantity 6122000 pound
Per unit cost of 0.00857
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changeover 6 $/pound
 RECOMMENDATIONS
• Sell off the excess capacity which would not be required even after 5 years to mitigate immediate losses
• Stop production of Poly & ABS which will constantly give negative operating margin under present operating
conditions, i.e. with 7% raw material wastage
• If at all required, source ABS from open market and sell it in their own label
• After all the above, keep prices constant if costs are not rising to avoid Japanese invasion
• Focus on improving market share in segments with PVC requirements because of highest operating margin
• Market share for Styrene product line needs to be increased to mitigate losses due to high contribution to
fixed costs
• Improve efficiency in all production capacities to avoid operation losses
• Post achieving production efficiency, gain further market share in the loss making segments to mitigate
losses due to high fixed costs

Current Scenario To recover loss

STYRENE (Need of
increasing Market
Share) Total Market Size 3800000
Volume produced 1032000 1178357
Market Share 0.271579 0.310094
GSP 0.2762 0.2762
Disc/Freight 0.0377 0.0377
Less Disc/Freight 246132 281038.1
Op. Cost 217752 248633.3
Op. Margin 28380 32404.82
Powered by TCPDF (www.tcpdf.org)
Fixed Cost 32404.8
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32404.8