Dominion Motors & Controls,
Ltd.
Team Members:
Jagriti Sharma Neha Pandey Pankaj Ramraje Shyam Pappala Kundeti Sanjana
20139 20148 20152 20153 20143
DOMINION MOTORS & CONTROL, LTD.
Products offered:
Motors(ranging from small fractional hp
units to 2000 hp)
Motor control units
Panel board units
1973 Northern Canadian oil fields were discovered in
1973 and since then DMC acquired 50% market
share.
1974 Hired a salesperson who was aggressive and
capable.
• Established an early foothold and strong market position.
1985 Threatened with the loss of market share due to
test performed by Hamilton Oil Co.
Sales Composition
SALES IN DOMINION IN 1985
Sells a motor and control
Sales in the unit as a package unlike
year 1985 other competitors.
amounted to DMC sold around 15% of
$323 million control and panel board
units(1973-1984)
About Oil Pumping Motors Market
Northern Canadian discovered in 1973, 5500 producing wells
by 1984.
Estimated 1000 new wells each year in next 5 years.
Maximum sale between April and September.
Several foreign competitors, they kept the prices 10%-20%
below Canadian standard price.
Buying and Selling process
LARGE PRODUCERS SMALL PRODUCERS
▪ Typically organised so that • Simpler organisations.
production was separated from
refining and marketing. • Owned few or sometimes just one
rigs.
▪ Included field operation people like
engineers, geologists and • Did no refining.
purchasers.
• Few had their own engineering
▪ Rig supervisors were considered as departments.
important people.
• Often followed large companies in
▪ Salesperson called on large their purchasing policies and
companies so as to obtain leads and
equipment choices.
to nurture the relationship.
ADVERTISING AND PROMOTION POLICY
❑ Management considered advertising program of limited value, though useful in
helping salespeople.
❑ However every effort was made to present effective selling copy and layout.
Actual installation pictures and sales arguments were used.
❑ Catalogs were important promotional tool, Single publication approach was
followed in contrast to pamphlets describing each motors.
Factors Affecting Specifications of Oil Well
Pumping Motors
● Most oil well pumping motors being sold were of 10-hp NEMA design C.
● Major factor affecting design of motors was Low Winter temperatures, this required a
motor with high starting torque.
● Overmotoring:
In order to ensure high torque, oil companies were using 10-hp motors even though these
were large enough than was actually required to lift the oil to the surface.
❏ Announcements by power companies :
❏ Change in power rate schedules.
❏ Stop over motoring and improvement
of “power factors” of customers’
installation.
(Till now no penalty for over motoring
was announced)
Hamilton’s Field Test Program
Objective of test performed by John Bridges, chief electrical engineer at Hamilton:
Define the specification of the motor which could be used most economically.
Findings of the tests:
● Fluid lifting requirements dictated a 3 to 5- hp motor.
● Starting torque in excess of 70 pounds-feet would energize the pumping units at temperature as
low as -50F.
● This starting torque would necessitate a 71/2-hp motor.
● There were existing competitors of 71/2-hp motor in market and DMC would be third choice.
PROBLEM STATEMENT
Dominion Motors & Controls, Ltd. is in danger of losing its foothold in the oil well pumping market,
because the largest Oil company, Hamilton Oil Company has deemed the DMC motors to be the third best
choice behind its competitors, Spartan and Universal motors.
The problem statement is “In what ways can DMC respond to the result of the tests conducted by
Hamilton Oil Company and come up with a proper solution in order for the company to maintain its
position as the leader in the Northern Canadian oil well pumping market.”
Possible Solutions:
1. Reduce the price of the 10 HP motor to the level of 7.5 HP motor:
Pros:
● That would help company to have share in the 1985 sales.
To gain a competitive position immediately.
●
=
Cons:
10 HP 7.5 HP
● This would not be the long run solution.
● Savings from using 10 HP motors were not large.
● Possibility of getting penalized in future for not maintaining low power factor.
● Profit would be drop almost 43% per motor.
● To maintain the same margin, 3 extra pumps per oil well to be sold.
2. Reengineering the current 7.5 HP Motor to generate torque equal to 10 HP motor;
i. Modifying the existing 7.5 HP internal motor component:
Pros:
● Can generate a starting torque equal to the Spartan’s 7.5 HP motor.
● This motor would be of same frame size as the existing 7.5HP motor.
● At least 105 pounds-feet of starting torque could be obtained.
Cons:
● Temperature rise would be greater than the NEAM standards.
● Significantly alter the safety & operating characteristics.
● Profit per motor is $359.51, more than the first option but less than
that earned by selling the original 7.5 hp motors by 26%.
ii. By using a larger motor frame.
Pros:
● Can generate high starting torque.
● This motor will meet all NEMA’s minimum standards performance specification.
● No temperature rise issue
Cons:
● Does not satisfy NEMA’s mounting dimension for its rating.
● Additional fixed costs of $ 50.49 per motor making it’s manufacturing cost $ 840.49.
3. Modify 5 hp motor with the starting torque of a 10 hp unit
A number of DMC's executives supported a move to design a definite-purpose motor for the oil well pumping
market. They felt this move enables them to regain effective product leadership.
Pros:
● Meets the demand of initial torque required even when using only a 5-hp motor.
● Exceeds minimum NEMA specifications which could help in bringing confidence (in
customers) on the product.
● Low costs and hence bigger margins on profits.
● Moderate price.
Cons:
● Not adaptable as it is a definite-purpose motor and not the one that's been used in the Canadian motor industry as
the industry uses general-purpose motors.
● Very small market to capitalize on and hence such a sizeable investment into a volatile market seems to be quite
risky.
4. Attempt to pursue Bridges and Hamilton executives:
The success of this alternative is completely dependent on whether the DMC executives were successful in their
negotiations in trying to persuade Hamilton’s executives into viewing their reports differently.
Pros:
● Helps reach the customer directly which wasn't the case earlier.
● Could gather valuable information that can be used as a primary source while compiling research study to use for
further future engineering.
● Can be seen as a long-term investment in maintaining DMC's future market position.
Cons:
● Could end up generating ill-will, if backfired.
● Inflexible and rigid.
● Requires additional hiring which would imply training the new recruitees by the Company engineers, who were
already feeling overburdened.
● No plan B, if failed to pursue Hamilton’s management.
RECOMMENDATIONS
Dominion Motors should develop new design of motors & continue selling 10 hp motors
at same price.
● The design specification should not follow the specifications by Hamilton’s Field Test as
these aren’t officially released.
● They should include the rig supervisors specifications in design phase.
● This helps the customers of DMC to avoid getting penalised for over motoring.
● This alternative will show long term gain to the company.
● The definite-purpose motor would also help DMC to develop brand new market
segmentation on oil well pumping industry.
