General Appliance Corporation

1. Play the roles of supplying general manager, purchasing general manager and finance staff

Stove Top Problem

a. Chrome Products Division

1. The decision to add costs to the product were result of the instruction of
manufacturing vice president.
2. The change in quality was not only necessary to do because of the quality control
personnel’s opinion, but above all the customers are realizing about the deteriorating
quality and complaints about it were received in a level that is concerning the the
president of General Appliances Coorporation.

b. Electric Stove Division

1. If they increase the price of the stove top, the end customer will notice enough the
increase of prices, but they will not be able to notice the difference of quality. That
will affect the selling performance in the market.
2. More noticeable difference should be done to justify the 90 cents of difference.
3. The evidence of that particular part should be modified is not clear. Is that what
customer wants? Is it really necessary? Further research should have been done.

c. Finance Staff Review

The fact that the chrome products are changing the quality because of the necessary changes
in the quality level of our products demanded by the customer, there is not doubt that this
action was the correct step to do it. The customer should be informed about the quality
improvement for the justifying the slightly increase of product’s prices.

Thermostatic Control Problem

a. Electric Motor Division

 1. The Monson Controls Corporation were losing money because they are selling below
their production cost. Logically will not be able to survive longer if they continue to
lose money. Their action is considered as better that not selling any, therefore it was
better for them to sell the product with lower cost that it should be.
2. Electric Motor Division is acting in the name of best for the company and has no
intention to see the plants to be closed in the long-term. Therefore the prices
proposed is for the best of the every internal parties involved.

b. Laundry Equipment Division & Refrigerator Division

1. As long as the inside division cannot produce below outside suppliers prices, it is
better for the product division to continue buying from outside suppliers.
2. The prices should be competitive enough for us to be able to sell the end product to
the customer, so even slightly changes in the components’ prices can affect the sales.

c. Finance Staff Review

1. Seeing the situation is would be likely for the price of outside suppliers to rise when
the excess capacity is not longer available in the market.
2. For the best interest of the company, we recommend product division to buy supplies
from the electric motor division so that the manufacturing plant still could operate.

Transmission Problem

a. Gear and transmission division

1. We have sent a letter to acknowledge laundry equipment division.

2. The deal of Thorndike Machining Corporation is an attempt to get the deal from
laundry equipment division. It is likely for them to increase the price once they have
the proposal signed.
3. The $12 price has considered the cost for funding the project proposed by
manufacturing division. In the future, this will bring lower cost and could provide the
supply for the entire product division.
b. Laundry Equipment Division

1. We have not received the so called letter of acknowledgement. Therefore we are not
concerned about the change. Eventhough we are wrong for not objecting to the
proposal at the meeting. Does not mean that we are agreeing to the deal.
2. If we buy from the outside supplier, we can get significant profit differences because
the price offered was far lower that

c. Finance Staff Review

1. The price difference provides a strong reason for the product division to buy from
Thorndike Machining Corporation.
2. The company could not sacrificed the product division to maintain another
manufacturer division if the price differences can hurt overall performance of the
sales.
3. If the price could not be discussed any further, the product division should be allowed
to purchase their supplies from outside company.