Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
Case study analysis
Case study analysis
Fundamentals of management case study
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Recommended: Case study analysis
Interactive Computer Systems Business Case Study
Summary of Decision Situation
Interactive Computer Systems was a multinational manufacturer of
computer systems and equipment. The Company was primarily a U.S based
corporation with the majority of its engineering and manufacturing
facilities located in the eastern United States. The company was
headquartered (parent company) in the U.S and worldwide offices
referred as subsidiaries. For example, when a customer in France
orders a system, the order is processed by the local European
subsidiary. The order then is transmitted to U.S to have the system
built. Upon the building of the system, the subsidiary buys it from
the parent company at an inter-company discounted price. Furthermore,
when a subsidiary sells the product, its selling price is based on
interactive Computer System’s U.S Master List Price uplifting it by
the increased cost of doing business. The Master List Price is for
standardized products only and subsidiary sets a local price for any
specialized products. Each company was held responsible for achieving
profit before tax of 15%.
One of the specialized products, “model 2000”, designed and
manufactured in Europe was only offered in Europe. Due to the
popularity of the product in Europe, the U.S customers demanded the
product to be sold in the U.S. The product eventually became available
in the U.S at a much lower price due to market conditions such as
competition. Due to the lower prices in the U.S markets, the European
customers started to order from the U.S offices. This made the
European subsidiaries furious as they started losing the sales volume.
At the same time, the U.S markets were performing really well. Both
groups stated that they followed the corporate pricing guidelines in
order for them to accomplish the 15% profit margin.
Comprehensive Analysis of Alternative Decisions
The marketing manager of Interactive Computer Systems, Peter Mark
became aware of the pricing use of model 2000 between the U.S and
European subsidiaries. The European and the U.S markets provided him
with the suggestions. The U.S market explained that due to the intense