Sensor Case Study

Topics: Cost, Variable cost, Cost accounting Pages: 5 (1599 words) Published: March 15, 2014
About the Sensor Industry
Few people realize how essential the sensor industry is to today’s society. Sensors can be found in almost everything we use on a day to day basis. America’s demand for smaller, lighter and faster products has driven the technology to innovate at a break-neck pace in order to keep up with the demand. According to the National Science Foundation, “incorporating new sensor technologies, manufacturers can bring new capabilities to their products while improving performance and efficiency.” (NSF, 2008) The sole shining star in the sensor industry was Sensors, Inc., which supplied a large majority of the manufacturing industry with electronic sensors for their products. In late 2009, the Securities and Exchange Commission (SEC) broke up Sensors, Inc. due to its monopoly of the U.S. market. (Capsim, 2010) The SEC released a statement which justified their move by stating, “We cannot allow monopolies of this sort to impact an entire industry! The customers that utilize these sensors are being held hostage.” (Capsim, 2010) Sensors, Inc. was dissolved into six smaller organizations: Andrew, Baldwin, Chester, Digby, Erie and Ferris companies. A Fresh Start

After Sensors, Inc. was dissolved, the assets and liabilities of the company were divided by the six new companies with each company controlling 16.67% of the market. In 2010, over two-thirds of the sales for the new companies came from the low end and traditional segments of the market (see fig. 1). A break out star from the beginning, Andrews, Inc. saw a clear need to restructure their organization and focus on their attention on other, less crowded segments of the market. Under a new management team, the first mission for Andrews was to decide on a strategy that would allow them to be the standout in the market. Andrews decided to focus on a hybrid strategy that incorporated a broad approach to the market while focusing on three key segments to increase revenue in: Low End, High End and Performance. By focusing on three markets in the industry, the company was able to reduce marketing cost and focus attention their attention on the performance and high end segments which require significant amounts of RD and automation. Andrews sought to gain market share in their target segments by strategically positioning two products in each of their markets. Able (traditional) was to be moved to the low end segment, Agape (size) was to be moved to the high end segment, and a new product, Avenge, was to be added to the lineup in the performance segment. By 2011, Andrews, Inc. was able to establish a dominant presence in two of the three key markets.

Focus on Innovation and Quality
One of the key strategies for Andrews, Inc. was early and frequent innovation and automation. Because the company focused much of its attention on highly specialized segments of the sensor market, R & D played a very import role in the strategic vision of the company. Given the nature of the industry, it is essential for the company to stay on the cutting edge of technology, especially for their high end and performance products. In the high end segment, ideal performance increased by 0.9 units and size decreased by 0.9 units each year. Buyers in the high end market value ideal product specifications as the most important factor in their decision to buy a product (43%). Buyers also value the age of a product (29%) when making their decision (Capsim, 2010). For the performance segment, ideal performance increased by 1.0 units and size decreased by -0.7 units each year. Buyers in the performance segment value a high reliability rate (43%) and ideal product specifications (29%). (Capsim, 2010) The buyers demand for a high quality product made it necessary to focus a large amount of their resources in those products. The company’s decision to focus on three markets, instead of the original five, allowed them to make the necessary changes without severe financial...
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