Motorking Corporation New Gas Extender
As Motorking Corporation considers introducing its now “gas extender” product into the market, the management must consider various factors to determine if this is a good financial move. The production manager needs to determine if the product will generate a profit for the corporation, how much product is expected to sell to determine how much to produce and how much to outsource.
The first thing that the production manager must consider is the optimal quantity of cases that can be produced. The marketing manager has indicated that if the economy is strong then Motorking will sell 100,000 cases. If the economy is moderate Motorking will sell 70,000 cases, and if the economy is weak, then
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The types of additives include detergents, carrier fluids, antifoam, dehazers, cetane improvers, antioxidants, dyes & markers, lubricity improvers, cold flow improvers, stability improvers, corrosion inhibitors, octane improvers, and anti-icing. The industry is currently led by North American but is growing in Asia-Pacific due to increased fuel demand. The market is expected to continue to grow in North America due to stricter environmental regulations and a desire for fuel efficiency. “A majority of fuel additives are consumed in diesel fuel applications. The diesel fuel additive market has been driven by the increasing Ultra Low Sulphur Diesel (ULSD) and bio-based diesel demand which requires significant amount of dosing.” The fuel additive market is highly competitive including several large and small companies. The industry is highly fragmented with a variety of products offered. Innospec Inc. (U.S.), BASF SE (Germany), and The Lubrizol Corporation (U.S.), are the most active companies in the fuel additives market. The top five companies together comprise nearly 40% of the market share.
Methyl Tertiary Butyl Ether (MTBE) is a chemical fuel additive that was commonly used in gasoline up until 2005 when the Energy Policy Act created an incentive for refiners to remove MTBE and blend fuel with ethanol instead. In the 1990’s MTBE was added to fuel at a higher concentration in order to comply with the Clear Air Act since it resulted in less emission of