Aurora Textile Company Case Study

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Aurora Textile Company Introduction: Aurora Textile Company was a yarn manufacturer established in the early 1900s, and 90% of the company’s revenue came from the domestic textile market. Aurora serviced four major customer segments: 1). Hosiery, accounted for 43% of Aurora’s revenue. The primary consumer products were athletic and dress socks, and Aurora was the largest volume producer of all cotton yarns for white athletic socks in the U.S.; 2). Knitted outerwear, the second-largest revenue source for Aurora, accounted for 35% of revenue; 3). Wovens, a small (13%) but important segment for the company, was believed to be a great market to find growth opportunities; 4). Industrial and specialty products, the smallest segment, it provided the highest margins for Aurora. Although Aurora was the leader in textile-mill industry, the company and the whole industry were in a crisis situation because of globalization, and cheaper production costs overseas. Since textile-mill was a labor-intensive industry, in more recent years, the search for cheaper production costs had begun to move the textile-mill industry to Asia. Secondly, the strong U.S. dollar had made foreign textile manufacturers products much cheaper than those from U.S. companies. In addition, the World Trade Organization recently had announced that it would ban its members from using quotas, which would further open the U.S. market to competition from other countries. So how would Aurora face the crisis, since its sales have decreased four years in row, and its price fell from $30 per share to $12 per share, how would Aurora solve its problems? Zinser 351, a new ring-spinning machine, was under considered by the management of Aurora. Was it a good investment and could it save Aurora? Analysis: (1). Kept using existing machine If Aurora kept using existing machine, let's assume that 1). The
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