Case Scenario 1: Romulac, Inc

question 20

Essay

Case Scenario 1: Romulac, Inc.
Romulac Inc. (RI), a subsidiary of a large successful manufacturing conglomerate, supplies a key component in the assembly of residential cooling systems (air conditioning units, etc.). There has been tremendous consolidation in RI's industry, to the point where only five suppliers of this particular component account for nearly 90 percent of U.S. industry sales. Paralleling this trend, its customers-composed of makers of branded residential air conditioning units like Carrier and Trane-have seen similar levels of consolidation in their own industry. Half of these firms produce all their components in-house, while the balance purchases them from specialized component manufacturers like RI. RI's business is extremely capital intensive, and their 40 percent share of the market allows them to also be the most profitable domestic player. Strong competitors exist in Europe and Asia. Although like RI, these foreign players' strongholds are their home regions, with negligible presence outside of the region. Some of
the larger Asian manufacturers have signaled an interest in more aggressively pursuing the lucrative U.S. market. RI is presently considering a $400 million dollar investment in a new plant, which will create a component that is much quieter, more efficient, and is likely to satisfy future regulatory standards. While the core technology for the new component is very old, RI's engineering and design skills have allowed them to retain their low cost advantage, even though the component will represent a significant improvement over products currently provided by its competition.
-(Refer to Case Scenario 1). Develop an argument as to why RI should try to be a first-mover with this new technology.

---

Definitions:

Kerensky

Alexander Kerensky was a key political figure in the Russian Provisional Government before the Bolshevik Revolution of 1917.

Red Guards

Paramilitary volunteer formations that emerged during the Russian Revolution of 1917, composed mainly of workers and peasants, supporting Bolshevik forces and involved in key revolutionary activities.

Factory Workers' Militias

Armed groups formed by industrial laborers, often for self-defense or promoting workers' rights during labor disputes.

Bolsheviks

The Bolsheviks were a faction within the Russian socialist movement that led the October Revolution in 1917, establishing the Soviet state.