MORGAN COMPONENTS Harvard Case Solution & Analysis

Morgan Components Case Solution

Problem Statement and Strategic Alternatives

            The main problem which is mentioned in the case is that the client of the company is asking to reduce the cost of the project to 25%. The reduction was requested by Asiacar on the door panel project. However, some part of the total investment was already made and the project has to be completed in the next six months. While the company is also facing some additional threats since the company has to decide either to reduce cost, and if the company reduces the cost, it will have to face huge loss while if the company refuse to reduce the cost, the company will have to forgo the whole contract.

 Now there are several options in front of the company the first option is that the company has to decide either to continue with the project or to let it go. Afterward, Sean O'Fearna has to analyze the cost structure of the company and to work on it to reduce the cost of production by working on process improvement if he decides to pursue the contract. Moreover, an alteration in the cost structure and negotiation in the prices will also require making a mutually agreed price among Morgan Components and Asiacar.

 Finally, Sean doesn't have the authority to decide the negotiations and to coordinate with AC therefore; he will have to collaborate with his company's executive to decide whether which option should be choosing. Moreover, this task will require a proper negotiation plan and a wonderful analysis of the project. Since, by highlighting the key strengths of the project and the potential for profitability, Sean can convince his superiors to continue the project.

 In a nutshell, it can be concluded here that Sean has to make a nice action plan and course of implementation to show how attractive the project is, what will be the benefits for the company to pursue the project and what will be the shortcomings of the project. In addition, Sean also has to show the overall impact of the project on the cost structure and the overall value of the firm since; this point will give the edge to Sean over the analysis, and it will also allow him to easily convince his seniors to continue the project. Conclusively it can also be seen that analysis is playing a crucial role here since, if the alternative approaches are not designed well, and all the analysis are not aligned with the company's policy, MC has to decline the project.

Evaluation of the Alternatives

There are three alternatives which the company can use in the case, the first option decides whether to continue the project or not, while the second suggests that the company have to use alternative cost reduction methods and finally, the last option suggest that the firm has to make an affordable price range and to negotiate on prices to continue the contract.

Continue the contract or cancel it

            The first problem is that the company has to decide whether it has to continue the contract or cancel it, therefore, to convince the top management the director has to show the losses which the company will have after canceling the contract. The first loss is that the company will have to lose 3 million Euros which will put a lot of burden on the cost structure of the company. However, the cost structure is also very high and if the large amount of 3 million is subtracted from the company the company will have to restructure the business. Moreover, another thing which has to be shown to the top management which is that the director has to check what is the differences with this company, i.e., MC and Plasticom.........................

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