Kanthal Essay

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Case 4: Kanthal A Industry and its relevant characteristics Kanthal was a major producer and seller of electrical resistance heating elements. It was the largest out of six division in the Kanthal-Hoganas group. It had over 10,000 customers worldwide with 95% of its sales attributed to exports. Competitive Environment Kanthal was made up of three divisions that were competing in the global market. Through the first division that supplied electrical appliances and heating systems it helped the company dominate 25% market share, making it a world leader in supplying heating alloys. The second division that supplied furnace products gained 40% market share and this was attributed to one of Kanthal’s newest product. Finally Kanthal’s third division is one of the few companies in the world with fully integrated manufacturing of thermo-bimetals which also claimed majority market share. Production Processes Kanthal’s manufacturing facilities operated in 6 different locations across the world. For production, there were various personnel in-charge of both order and volume related work, these include stock persons, production planners, foremen, operators and people responsible over products ready for transportation. Old cost system There were two pools of indirect costs which were manufacturing costs allocated on a basis of direct labor, and selling/admin costs that were treated as period costs. Production overhead, selling and admin costs were all fixed. Most of the company’s sales, marketing and admin. costs were recognised as a percentage of sales revenue. Potential problems with the old cost system Selling and admin. costs were expensed rather than allocated to product lines and customers, making the company bear all the costs. Some customers placed heavy demands than others but resources were still being equally allocated across all products

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