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Dominion Motors: Impact Of Recent Change

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Dominion Motors

Impact of Recent Change:
Recently, there have been estimates pointing to an average of 1,000 new wells each year for the next five years, which implies that there should be an increase in demand of oil well pumping motors. This is great news for Dominion considering they had acquired over 50% of the available market since 1973 for these motors. The rates charged by electrical companies were also affected and instead of a flat rate for all motors, there was a monthly base charge per horsepower. A 5 horsepower motor would be the cheapest at $125 per month, a 7.5 horsepower would be $161.25 per month, and most expensive would be a 10 horsepower motor at $200 per month. Companies using larger horsepower motors would …show more content…

With the alleged penalties for the unnecessary use of a 10-hp motor to guarantee lifting oil to the surface, it made sense for companies to start using smaller horsepower motors that still had the necessary torque needed to start and use the motor at any cold temperature. Both of these changes implied that there would be an increase in demand for 5 horsepower motors because they are the cheapest to keep over time.

Buyer-Seller Relationship:
Initially in 1974, the salesperson hired by Dominion (Lee Smith) was not only "aggressive and capable and could talk the oil people's language," but was also the only salesperson in the area with his skill set. This gave Dominion an early competitive advantage in Canada, and allowed Smith to establish beneficial relationships with members at all levels of the oil companies. These relationships are beneficial when maintained over the years, because it keeps customer retention high. However, if a company changes salespeople, and the new salesperson does not work to continue the relationship, the customers can be inclined to pursue other options. Lee Smith had built a relationship with Hamilton over the years, but if he were to leave the company, it can be assumed that his replacement would not keep up the relationship. This would cause someone like John Bridges to disregard the impact on Dominion when publishing a study that

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