SIEMENS ELECTRIC MOTOR WORKS A PROCESS ORIENTED COSTING CASE STUDY
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Siemens Corporation was a producer of electrical and electronic products. This case focuses on the Electric Motor Works (EMW), part of the Manufacturing Industries Division that produced low-wattage A/C motors.
Siemens EMW faced competitive conditions in the late 1970's for standard motor production. Standard motors represented 80% of their sales volumes with the remaining 20% for customized motors. Even after a major expansion and automation program, EMW could not compete with the labor cost advantages that Eastern Bloc (Post-war production facilities that were seized) had for production of standard motors.
EMW's strategy was to produce a low-volume, customized A/C motor. The new custom motor strategy involved changing the production process. Production became more complex- automated and high tech. In the 1970's, EMW's annual sales volume was 230,000 motors. In 1987, after the production process was upgraded, the annual sales volume went to 630,000 motors...