MORGAN COMPONENTS Harvard Case Solution & Analysis


Morgan components is one of the largest and most reputed manufacturers and sellers of automobile parts. The company has specialized in producing a wide spread range of automobile components, which include chassis, air-conditioning components, electronic components, exterior components, interior components and engine components. The exterior components that the company produces include lights bumpers and grilles whereas; the interior components that the company produces include dashboard, door and instrument panels.

In addition to this, the top management of the company has made its back breaking efforts in order to enhance the overall efficiency of the operations of the company.Moreover, the management of the company has also focused on expanding the overall business of the company through making huge and potential acquisition.

In addition to this, the company currently operates through 84 plants in approximately 25 countries as well as the company owns approximately 55000 employees. Thus, the management of the company has efficiently managed to expand the operations of the company efficiently and effectively.
Furthermore, the company has established four of its plants in Ireland, 3 of which are acquired from its rival manufacturer named Plasticom in 2004. In addition to this, the company’s one of the biggest and most potential client is Asia car to whom the company supplies the automobile components since a long period of time.

Moreover, the 3 plants acquired from Plasticom have enabled the company to produce more innovative products as well as brought in new door and instrument panel technology, which has further increased the group’s business with Asia car.

However, in 2003, the company made sales approximately of 12 billion pounds whereas; the company faced a loss of approximately 913 million pounds. This made the management of the company concerned about the financial health of the company as well as the decreasing competitiveness of the company.


In January 2003, Asia car invited the Clondalkin plant of the company to tender for the contract to co-design and produce the front door panels for a new model of automobile, which is expected to be launched in May 2005.

The company contracted for the manufacturing of 300,000 units, which would be distributed over the period of 5 years. This contract would allow the company to enhance its overall profitability as well as it would also the company to fuel up its overall growth. Hence, the management of the company strived for facilitating Asia car with a competitive bid price in order to get the contract.

In March 2003, the company got the contract from Asiacar.In addition to this, the company would be incurring a manufacturing cost of 79.2 pounds per unit. However, this manufacturing cost per unit does not include the investment in moulds as it would be paid by Asiacar over the period.

In addition to this, the expected gross margin and net profit margin of the company in the contract is approximately 16% of sales and 12% of sales respectively. Moreover, the moulds used by the company for the production of the panels would be returned to the Asia car as it would remain as the property of Asia car over the period of 5 years................................

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