Product Costing

Development and discussion of the strategy
Baldwin is considered as an innovating company that manufactures sensors for different market needs; low end, traditional, performance, size and high end which require different features and expectation from customers. Throughout 8 years, investments and strategic decisions were made in order to keep competitive and meet the variations on each market.When the company was included in the competition it was decided to carry out a special strategy which seemed to be the most appropriate to meet the yearly changes from customers. Through a research it was detected that the market expectations, from each sector, progressively experienced changes which followed a diagonal movement seen in the graph Size Vs Performance; customers were expecting toreceive smaller and more reliable sensors. The main strategy that was followed consisted on maintaining our products almost fixed as the time passed, taking advantage of the trend movements and just making slight changes in order to keep inside the circles. However, extra details were also taken in consideration since customer expectations also depended on other criteria such as price, age of theproduct, reliability and size. Thus, careful observation was taken in order to track the changes of these parameters and it was always met according to their level of importance.
At the beginning we decided to focus on those products located in the diagonal of the graph; traditional, high end and low end, giving less importance to size and performance that were also smaller on market demand. Thus,to strengthen our strategic we decided to launch a new product in the high end sector which would shift to traditional and low end as the time went by so it would cover different areas of demand reaching the best age at the end of the simulation at the Low End market. Nonetheless some mistakes that were made, when that product was launched, jeopardized our whole strategy; no capacity was forgotto be bought from the beginning and one entire year was lost when the product was on his best young position, so it had a negative impact on the upcoming years, the investment did not pay off.
Creating a new product from the beginning and supporting the diagonal strategy with a high marketing status as well as great positioning was our key weapon to gain great market share and cloud thecompetitors, so from the beginning we spent lots of money that was borrowed from banks. Our first mistake made us waste all that effort so we were immerse on a big debt and we did not achieved the expected goals; competitors were above us and they gained advantage from us regarding market share and stability. Additionally, we did not realize that all mistakes that we made had no chance to let us beprofitable, the contrary; we were paying and working to lose money and investments on automation within the production line were forgotten which made labour and material costs keep high. It was a non-ending race what we were playing since each year we were decreasing prices at not profit at all.
As a result, we changed completely our initial strategy; instead of gaining market share, struggling with noprofit and fighting with those big companies that were meeting huge demands, we decided to become a small profitable company. It was decided to eliminate those products that did not have potential for the upcoming years, such as performance and size; they were difficult and expensive to maintain and even they did not generate profit at all. Therefore, we focus all attention and investments onthose promising products which gained a great deal of market share the previous years and had a constant positive potential.
Comapany’s structure and organization
Baldwin was focused in all important activities that were necessary to achieve its goals. Production department was basically the final producer of the required product and constant attention was made on this department, however it...