Tork Essay

645 Words3 Pages
TORK CORPORATION COMPETITIVE COST ANALYSIS 1. What are the primary cost drivers for room air conditioning? How do the drivers differ between LG and Tork? The primary cost drivers are Design, Geography, Facility and Execution. The differences over cost driver between LG and TORK are mainly come from the followings, please see below: Design: LG uses the plastic parts which the weight is lesser than Tork steel’s part and also the cost are cheaper. Moreover, the assembled times of LG are faster than Tork along with the wages rate of LG are lower. In conclusion, LG are cheaper and faster than Tork Geography: The freight costs of LG are significantly higher due to requiring ocean freight and shipping to distribution centers, whereas Tork relies on trucks and trains. However, LG enjoys a large wage advantage in Korea. Facility: LG has higher manufacturing volume based on they has an advantage from scale of economies by purchasing lots of material and got the discount on the prices. Moreover, they can use its manufacturing nearly full capacity. Execution: Tork’s low-end sales where demand was highly seasonal al, meaning production is increasing in late winter and early spring. Thus, LG can gain more advantage based on their sales tend to be smoother throughout the year. 2. Is LG’s cost advantage in the small room air conditioning unit sustainable? What are the key risks? Yes, LG can take cost advantage over the small air conditioning, because based on the key cost driver analysis, its show that they hold significant advantages in all key cost drivers except for the freight. These can create sustainability over their advantages. However, the key risks that may lead to decrease their sustainability would be raising wages in Korea and the ocean freight costs. 3. Does LG’s advantage extend to the larger range of room air conditioning products? Based on the data
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