(b) What considerations should the CEO include when evaluating these alternative and how could this assessment be completed? What additional information would be needed to conduct an evaluation of the alternatives?

You were effectively being squeezed at both ends, and as a result witnessed a gradual but significant decline in sales, market share and profits, to the point at which your Hydraulic Presses equipment business is now barely making an operational profit (refer to Table 1). Precision Presses identified this trend 10 years ago and made the decision to invest in the development of Electric Servo Presses. These use high power electric actuators to generate the necessary mechanical force and are typically more controllable, reliable, clean and safe than their hydraulic equivalents. This business expanded rapidly at first again your approach was to take a Differentiation Strategy leveraging the additional value that this technology offered. However, over the last 5 years many other companies also entered this field and the competitive pressures from both the high end and low-cost producers resulted in sales slowing once again, and the initially high profit margins reducing significantly (see Table 1)

All figures in $Mils projection

1980

1990

2000

2005

2010

2015

2020

2030

Hydraulic Presses

Global Market Revenue	255	332	577	818	1039	1301	1558	2300
Precision Presses Equipment Revenue	48	63	56	56	53	43	36	-
Precision Presses Operating Profit Margin	31.0%	28.9%	24.3%	21.4%	11.8%	7.3%	0.8%	-
Precision Presses Market Share	18.6%	19.1%	9.7%	6.9%	5.1%	3.3%	2.3%	-

Electric Servo Presses

Global Market Revenue	0	50	378	657	1124	1682	2408	4400
Precision Presses Equipment Revenue	-	-	-	55	153	165	123	-
Precision Presses Operating Profit Margin	-	-	-	37.3%	36.1%	22.5%	13.6%	-
Precision Presses Market Share	-	-	-	8.4%	13.6%	9.8%	5.1%	-

The Board of Directors and Shareholders were concerned about the future health of the company so you decided to undertake a Major Strategic Review to determine the best path forward for Precision Presses. You included a Capabilities Assessment to see if there were some technologies or resources in the company that could provide a sustained competitor advantage. One significant finding related to the automation and software capabilities/ products that Precision Presses had developed. The Marketing and R&D departments had realised when introducing the Electric Servo Presses that automation and data management could become a key competitive advantage. The increased controllability of Electrical Servo Presses provided an opportunity to optimise the manufacturing process through applying Machine Learning Techniques and Big Data analysis. Three years ago Precision Presses had acquired a small start-up company with Artificial Intelligence expertise in industrial applications. Through integrating their know how, Precision Presses had by far the best automation and digital solutions for presses in the industry (their so called Precision Platform). Some of your customers had been asking you to sell the platform as a stand=alone offer or to install on competitor equipment, or even on whole production lines, but the company had resisted. It was hoped that the automation system would be a key reason to buy Precision Presses own equipment, but unfortunately this had not been able to compensate for the lack of competitiveness in the core machinery vs competition.

The CEO pondered the future for the company. Precision Presses had a long tradition of producing equipment and therefore he felt a strong desire to continue to invest in their Hydraulic and Electric Servo equipment. However, clearly there were several alternative paths that he could take.

1. What considerations should the CEO include when evaluating these alternative and how could this assessment be completed? What additional information would be needed to conduct an evaluation of the alternatives?