Tyler Abrasives, Inc.

Group 3
Name
Roll No
Deepak Sasikumar
13P019
Saurabh Wagh
13P057
Tejas Shah
13P046
Anirudh Krishnan
13P006
Arjun Murthy
13P012
Aswin Sridhar
13P038

Context
Present in 41 locations in 21 countries, but
different prices in each country
These price variations were in some cases
too large to be passed off as the results of
differences in local operations, transportation
and distribution costs
Abrasive were used in 3 forms: Bonded,
Coated, Loose
Biggest customer: Genag
Genag demand a global pricing scheme
Sales Revenue
Tyler was considered as price leader
$210
All subsidiaries are autonomous
$580 $960
Bonded

Coated

Loose

Drivers of Foreign Market Pricing

Company Goals:
Company Costs: Rigid cost plus pricing,
flexible cost plus pricing, dynamic
incremental pricing
Customer Demand:
Competition: Only a few companies sold at a
higher price that Tyler, most competitors
were about the same or very slightly lower;
one or two sold at 10 to 15% cheaper
Distribution channels: Both direct from the
plant and through 300 distributors
Government Policies:

Global Pricing and currency fluctuations

When Domestic Currency is WEAK

When domestic currency is STRONG

Stress price benefits

Engage in non-price competition by improving

quality, delivery and after-sale services

Costly features expand product line and add

more

Improve productivity and engage in vigorous

cost reduction

Shift sourcing and manufacturing to domestic

market

Shift sourcing and manufacturing over seas

Exploit export opportunities in all markets

Give priority to exports to relatively strong

currency countries

Conduct conventional cash-for-goods trade

Deal in countertrade with weak currency

countries

Use full costing approach but use marginal

cost pricing to penetrate new/competitive
markets

Trim profit margins and use marginal cost

pricing

Speed repatriation of foreign earned income

and collections

Keep the foreign earned income in host

country, slow collection

Minimize expenditures in local, host country

currency

Maximize expenditure in local, host country

currency

Buy needed services (advertising, insurance,

transportation, etc) in domestic market

Buy needed services abroad and pay them in

local currency

Minimize local borrowing

Borrow money needed for expansion in local

market
Ref: Book Chapter 12
Bill foreign customers in their own currency

Bill foreign customers in domestic currency

International Pricing
Proposal
Establish the US prices of Nov 1,
1989, as ceilings for a given
minimum quantity of grinding wheel
for all Genags foreign plants
Where a local price was already
lower than that in the US, the local
price would remain in force

Implementing Price
Coordination
1.
2.
3.
4.

Economic Measures
Centralization
Formalization
Informal Coordination