One of TFC’s major customers, Gulf Stream, approached TFC with an interesting proposal. It wanted TFC to design and build a low-end pusher chassis for this market. This chassis would go into a motor home that would cost between $75,000 and $90,000. In contrast to the current line of products, this chassis would not be customized. Rather, once the chassis was designed, it would not be changed. Production runs would go up from batches of five tobatch runs of 100. Critical to success in this market would be cost and conformance to the schedule. If TFC could be the first to produce such a chassis, it would own the market. The financials were very attractive. Theoretically, it seemed easy to TFC to enter this market. All that had to be done was to take an existing chassis and to take out the “costs” by using less expensive components. While TFC had never built such a chassis, there was no reason why it should not work. The only danger that the people at TFC could identify was that once it entered this market, it would be potentially competing with such firms as Ford, GM, and Toyota (major suppliers of the existing chassis). However, these firms supplied pullers (a chassis with the engine in front) – not pushers, like the proposed TFC product. In light of these issues, John was not sure whether this was the right market for TFC.
Trail Frame Chassis Case Questions
Be sure to support your answers
1.What would/could motivate a company such as TFC to try to enter a new product market such as the “lower-end” motor homes? From a marketing perspective is this a good idea? From a financial viewpoint could this be a profitable venture in either the short term or long term?
2.Does TFC appear to have the talent and process capabilities or competencies to enter the proposed new market? Can it produce both type of motor homes?
3.What difficulties do you foresee with TFC trying to produce the “lower-end” motor homes and the high-end motor homes in the same facility?
4.What does the case indicate about a firm’s growth, its product(s) life cycle(s), its core competencies, and its competition?
5.If you were hired as a corporate strategist or operations management strategist to assist TFC with this decision, what would you recommend? What factors is this decision based on?
