FAW_Pricing_0225.docVIP免费

PricingINTERVIEWDATE:Feb25th,2000INTERVIEWERNAME:BillHe,AnneWangIntervieweeNameMs.Yinyin,Ms.WangPositionDirectorofMarketDepartmentCompanyandAddressFAWTradingCompanyTelephone/Fax(0431)5909775BackgroundKeyProcesses/OperationsTrucksSparepartsKeyIssuesConclusionBackgroundPricingSectionisunderrestructuringrightnow.WhetheritwillbelongtoFinanceDepartmentornotisstillunderdiscussion.PricingSectionhastwomajorfunctions:truckpricingandsparepartpricing.BothofthefunctionsarestrictlycontrolledbyGroupFinanceandPlanningDepartment.Thereisanewpricingpolicyissuedfortrucksales.TheTradingCompanybuystrucksfromFAWGroupandcanpricingitatanyleveltheyfeeltheycansalethetruck.However,thepolicyisstillunderdiscussionanditwon'tbeappliedtopricingofspareparts.Asfarasservice/sparepartsisconcerned,itisacknowledgedthatSAWdidbetterjobinservicenetworkconstruction.FAWnoticedtheirweaknessinserviceofferingandmadesomeimprovementinrecentyears,however.KeyProcesses/OperationsTrucksOneminimumpricelistisgivenfromFAWGroupFinanceandPlanningsectiontoFAWTradingCompany.Currentlyupto20%upwardvarianceisallowed,butit'sveryhardforFAWTradingCo.toraisethepricebecauseFAWtrucksdonothavemanyuniquefeaturescomparedwithSAWtrucks.DealersandenduserswillnaturallyturntoSAWifFAWpriceishigher.Dealerstendtolaunchpricewarintrucksellingcompetition.TheyarewillingtosellinapricelowerthanFAW'sDealerPrice,andearn1rebatefromFAWattheendofyear.ThusFAWisveryweakincontrollingthepriceofitsowntrucksonthemarket.FAWisconsideringsomenewpoliciestoregulatethedealers'behaviour.Theyrequireddealerstosellthetrucksatleast1%higherthanFAW'sDealerPrice.However,thisisstillanewpolicyandit'snotclearwhetheritcanworkornot.SparepartsSparepartspricingismorestrictlycontrolledbyFAW.ThreepricesaresetupPlanningprice:pricefromFAWplantstoFAWTradingCompanies.Thispriceisdecidedthroughcostplusmethod,whichincludesthetotalTMCforsparepartproductionaswellaslaborcost.OwingtotheeconomicburdenofFAW,thispriceisfarhigherthanthatofsmall,suburbpartsproducers.Transferprice:priceFAWTradingCompanycangivetoFAWsparepartscentres.Approx.10%higherthantheplanningprice.Retailprice:pricethesparepartscentrescangivetoendusers.Approx.20%higherthantransferprice.FAWTradingcompanydoesnothaveanyflexibilityinadjusttheprice.KeyIssuesFAWPricingDepartmentisfacinggreatdifficultiestoRaisetheirpriceintherangeof20%inordertogainprofit.Usually,theycanonlyraiseitupto3-4%inbestsellingseasons.NorcanitlowerthepriceduetothestrictcontrolofFAWGroupFinanceDepartment.Stopdealersfrompricewartoregulatethetruckmarket.FAWtrucksdonothavemanyuniquefunctions,sotheywilleasilyshifttoSAWifFAWpriceitstruckshigher.Thereissomegovernmentinterferenceonsellingtrucksformilitaryusage.FAWissellingthetruckstothemilitaryatapricelowerthanitsmanufacturingcost.Thispriceissettledbygovernmentandnotabletoberaised.Thus,themoreFAWsellstothemilitary,themoreFAWlosses.FAWdonotpayenoughattentiontoitsspareparsselling.FAWonlythinksthesparepartssellingasawaytoprovidebetterservice.FAWdidn'trealisethatsparepartsmightbetheoriginofprofitaswell.Indecidingthepriceforspareparts,FAWusessimplecostplusmethod.ThecostofsparepartsincludesalargepartSG&Awhichcouldincludeslaid-off/retiredemployeebenefits.Thustheyhavedifficultyinreducingtheex-factorycost.FAWmanagementdoesn'tpayattentiontoitalsobecausethecurrentsaleofsparepartsistoosmall.2ConclusionPricingfunctioninFAWTradingCo.isstrictlycontrolledbyFAWGroupFinanceandGovernmentPolicies.AlthoughFAWTradingCo.hasa20%upwardvarianceinpricingthetrucks,ithardlyworksgiventhemarketcondition.FAWdoesnothaveanyadvantagereproductfeaturesoverSAWorCHNDTC.Besides,FAWneedtogivemoreflexibilityonitssparepartspricing,asthismightbeanimportantsourceofprofitforFAWinthefuture.3