Business Management-AW471 online

Business Management-AW471 Online Services

Bach Carpet Company

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 included high-grade carpeting; 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 not be 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 done in 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 few years for equipment replacement and possible diversification. The 1993 price increase was oneof several decisions made in order to provide funds for these plans.

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.

You can read more about our case study assignment help services here.

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 Case Id mentioned in end of every Q&A Page. You can also send us your details through our email id support@assignmentconsultancy.com with Case Id in the email body. Case Id 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 Case Id . 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.

Case Approach

Scientific Methodology

We use best scientific approach to solve case study as recommended and designed by best professors and experts in the World. The approach followed by our experts are given below:

Defining Problem

The first step in solving any case study analysis is to define its problem carefully. In order to do this step, our experts read the case two three times so as to define problem carefully and accurately. This step acts as a base and help in building the structure in next steps.

Structure Definition

The second step is to define structure to solve the case. Different cases has different requirements and so as the structure. Our experts understand this and follow student;s university guidelines to come out with best structure so that student will receive best mark for the same.

Research and Analysis

This is the most important step which actually defines the strength of any case analysis. In order to provide best case analysis, our experts not only refer case materials but also outside materials if required to come out with best analysis for the case.

Conclusion & Recommendations

A weak conclusion or recommendations spoil the entire case analysis. Our expert know this and always provide good chunks of volume for this part so that instructors will see the effort put by students in arriving at solution so as to provide best mark.

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: Business Management-AW471

Looking for best Business Management-AW471 online ,please click here

Summary