Beauregard Textile Company

By D. Srinivas, Greatlakes , Chennai

8098663752

1 Market Share Analysis

Quarter
1988 1st
2nd
3rd
4th

Price
3
3
3
3

1989 1st
2nd
3rd
4th

3
3
3
3

1990 1st
2nd
3rd
4th

4
4
4
4

B
Volume
Price
124870
126016
125426
198863
575175
127201
125277
126124
125302
503904
74860
77216
75000

3
3
3
4
3
3
3
3
3
3
3

C&P
Volume
Total Vol
100000
224870
100000
226016
100000
225426
25000
223863
325000
900175
100000
227201
100000
225277
100000
226124
100000
225302
400000
903904
150000
224860
150000
227216
150000
225000

2 Profit Analysis if B alone increase the price

Quarter
1988 1st
2nd
3rd
4th

Price
3
3
3
3

1989 1st
2nd
3rd
4th

3
3
3
3

1990 1st
2nd
3rd
4th

4
4
4
4

Beauregard
Volume
cost
profit
Price
124870
3.31 -38709.7
126016
3.31
-39065
125426
3.31 -38882.1
198863
3.102
-20284
-136941
127201
3.31 -39432.3
125277
3.31 -38835.9
126124
3.31 -39098.4
125302
3.31 -38843.6
-156210
74860
3.96
2994.4
77216
3.96 3088.64
75000
3.96
3000
75000
3.96
3000
12083.04

3
3
3
4

M/share
B
C&P
55.5%
44.5%
55.8%
44.2%
55.6%
44.4%
88.8%
11.2%
63.9%
36.1%
56.0%
44.0%
55.6%
44.4%
55.8%
44.2%
55.6%
44.4%
55.7%
44.3%
33.3%
66.7%
34.0%
66.0%
33.3%
66.7%

0
C&P
Volume
cost
100000
100000
100000
25000

3.574
3.574
3.574
6.861

3
3
3
3

100000
100000
100000
100000

3.574
3.574
3.574
3.574

3
3
3
3

150000
150000
150000
150000

3.136
3.136
3.136
3.136

market shrinkage
180000
100107

79893

0
Profit
-57400
-57400
-57400
-71525
-243725
-57400
-57400
-57400
-57400
-229600
-20400
-20400
-20400
-20400
-81600

-14125

3 Profit analysis if Both increased Price

Price
1990 1st
2nd
3rd
4th

4
4
4
4

Volume
74860
77216
75000
100107

Beauregard
C&P
Cost
Profit Price
Volume
Cost
3.96
2994.4
3
150000
3.136
3.96 3088.64
3
150000
3.136
3.96
3000
3
150000
3.136
3.574 42645.58
4
79893
3.9
51728.62
Market Demand decreaes by 20%

profit
-20400
-20400
-20400
7989.3
-53210.7

4 Profit analysis if C&P alone increases

price
1990 1st
2nd
3rd
4th

Vol
4
4
4
3

Cost

74860
77216
75000
198863

3.96
3.96
3.96
3.102

Profit
price
2994.4
3088.64
3000
-20284
-11201

3
3
3
4

Vol
Cost
Profit
150000
3.136
-20400
150000
3.136
-20400
150000
3.136
-20400
25000
6.861
-71525
-132725

3
3
3
3

Vol
Cost
Profit
150000
3.136
-20400
150000
3.136
-20400
150000
3.136
-20400
0
3.574
0
-61200

5 Profit analysis if both maintains the same price $3

price
1990 1st
2nd
3rd
4th

Vol
4
4
4
3

Cost
74860
77216
75000
0

3.96
3.96
3.96
3.31

Profit
price
2994.4
3088.64
3000
0
9083.04

B-M/s
C&P-M/S

225000
55.70%
44%

Prisoner's dilema
C&P
$4

BTC
$3

$4

$3

52000 (55.5%),
-53000(44.5%)

12000 (33.5%),
-82000(66.5%)

.-11000(89%),
-130000(11%)

.-29000*(55.5%),
-12000*(44.5%)

If B is at $3, it is highly likely that C&P will be at $3 as both market share and profitability worsens if increase to $4. This can be attributed to local presence of
B as mentioned in case study.If B increases to $4, C&P tries to price $4 to decrease the loss. If C&P spoilsport the profit and MS, it has to be at $3 by bearing
extra loss. Despite that B is profitable.Hence, it is better B should increase the price