Bach Carpet Company Case Study Assingment Help With Solution

Posted on April 25, 2017

Bach Carpet Company Case Study Assingment Help With Solution

 

Bach Carpet Company produced high-grade carpeting materials for usein automobiles and recreational vans. Bach’s products were sold to finishers, who cut and bound the material so that it would fit perfectly in the passenger compartment or cargo area (e.g., automobile trunk) of a specific model vehicle. These finishers also made carpet floor mats. Some of these finishers were captive operations of major automobile assembly divisions, particularly those that assembled the “top of the line” cars that includedhigh-gradecarpeting; other finishers concentrated on the replacement and van customizing markets.
 
Late in 1993, the marketing manager and the chief accountant of Bach met to decide onthe list price for carpet number L-42. It was industry practice to announce prices just prior to the January-June and July-December “seasons.” Over the years, companies in the industry had adhered to their announced prices throughout a six-month season unless significant unexpected changes in costs occurred.
 
Bach was the largest company in its segment of the automobile carpet industry; its 1993 sales had been over $40 million. Bach’s salespersons were on a salary basis, and each one sold the entire product line. Most of Bach’s competitors were smaller than Bach; accordingly, they usually awaited Bach’s price announcement before setting their own selling prices.
 
Carpet L-42 had an especially dense nap; as a result, making it required a special machine, and it was produced in a department whose equipment could notbe used to produce Bach’s other carpets. Effective January 1, 1993, Bach had raised its price on .this carpet from $3.95 to $4.75 per square yard. This change had been donein order to bring L-42’s margin up to that of the other carpets in the line.Although Bach was financially sound, it expected a large funds need in the next fewyears for equipment replacement and possible diversification. The 1993 price increase was oneof several decisions made in order to provide funds for theseplans.
 
Bach’s competitors, however,had held their 1993.prices at $3.95 on carpets competitive with LA2. As shown in Exhibit 1, which includes estimates of industry volume on these carpets, Bach’s price increase had apparently resulted in a loss of market share. The marketing manager, Kim Blevins, estimated that the industry would sell about 630,000 square yards of these carpets in the first half of 1994. Blevins was sure Bach could sell 150,000 yards if it dropped the price of L-42 back to $3.95. But if Bach’held its price at $4.75, Blevins feared a further erosion in Bach’s share. However, because some customersfelt that L-42 was superior to competitive products, Blevins felt that Bach could sell at least 75,000 yards at the $4.75 price.

 

How it Works

How It works ?

Step 1:- Click on Submit your Assignment here or shown in left side corner of every page and fill the quotation form with all the details. In the comment section, please mention product code mentioned in end of every Q&A Page. You can also send us your details through our email id support@assignmentconsultancy.com with product code in the email body. Product code is essential to locate your questions so please mentioned that in your email or submit your quotes form comment section.
 
Step 2:- While filling submit your quotes form please fill all details like deadline date, expected budget, topic , your comments in addition to product code . The date is asked to provide deadline.
 
Step 3:- Once we received your assignments through submit your quotes form or email, we will review the Questions and notify our price through our email id. Kindly ensure that our email id assignmentconsultancy.help@gmail.com and support@assignmentconcultancy.com must not go into your spam folders. We request you to provide your expected budget as it will help us in negotiating with our experts.
 
Step 4:- Once you agreed with our price, kindly pay by clicking on Pay Now and please ensure that while entering your credit card details for making payment, it must be done correctly and address should be your credit card billing address. You can also request for invoice to our live chat representatives.
 
Step 5:- Once we received the payment we will notify through our email and will deliver the Q&A solution through mail as per agreed upon deadline.
 
Step 6:-You can also call us in our phone no. as given in the top of the home page or chat with our customer service representatives by clicking on chat now given in the bottom right corner.

Features

Features for Assignment Help

Zero Plagiarism
We believe in providing no plagiarism work to the students. All are our works are unique and we provide Free Plagiarism report too on requests.

 

Relevancy
We believe in providing perfect, relevant and 100% accurate solutions to the student as per questions asked. All our experts are perfect in providing that so as to give unique experience to the students.

 

Three Stage Quality Check
We are the only service providers boasting of providing original, relevant and accurate solutions. Our three stage quality process help students to get perfect solutions.

 

 

100% Confidential
All our works are kept as confidential as we respect the integrity and privacy of our clients.

Related Services

 
During their discussion, Blevins and the chief accountant, Bill Kirkwood, identified two other aspects of the pricing decision. Kirkwood wondered whether competitors would announce a further price decrease if Bach dropped back to $3.95. Blevins felt it was unlikely that competitors would price below $3.95 because none of them was more efficient than Bach,and there were rumors that several of them were in poorfinancial condition. Kirkwood’s other concern was
whether a decision relating to carpet L-42 would have any impact on the sales of Bach’s other carpets. Blevins was convinced that since L-42 was a specialized item, there was no interdependence between its sales and those of other carpets in the line.
 
Exhibit 2 contains cost estimates that Kirkwood had prepared for various volumes ofL-42. These estimates represented Kirkwood’s best guesses as to costs during the first six months of 1994, based on past cost experience and anticipated inflation.
 
REQUIRED:
 
1. What was the relationship (if any) between the L-42 pricing decision and the company’s future need for capital funds?
 
2. Assuming no other prices are to be considered, should Bach price L-42 at $3.95 or $4.75?
 
3. If Bach’s competitors hold their prices at $3.95, how many square yards ofL-42 would Bach need to sell at a price of $4.75 in order to earn the same
profit as selling 150,000 square yards at a price of $3.95?
 
4. What additional information would you wish to have before making this pricing decision? (Despite the absence of this information, still answer question number 2.)
 
5. With hindsight, was the decision to raise the price in 1993 a good one?

 

Product Code :Case113

To get answer for this question, kindly click here (Note: Don’t forget to write the product code in comment section)

You can also email us at assignmentconsultancy.help@gmail.com but please mentioned product code in the mail body while sending emails.You can browse more questions to get answer in our Q&A sections here.

Summary
User Rating
5 based on 1 votes
URL