My Notes Essay

979 Words Nov 26th, 2012 4 Pages
These are my observations on the Lille Tissage Exercise that I had given in the last BBMK class.

Facts :

Lille Tissage is the largest company in its segment. (FF 96 Mn T.O) and it wants to expand for which capital is needed. The company’s sales force is on Straight salary – they sell all lines.

• Makes Item 345 – Price Leader – Small Competitors – Wait for LT to announce price – Losing market share from 1995 on Item 345

1. It is a fact that item 345 has lost market share and as the product manager I would be concerned about it. By retaining FF20 price I can gain market share only if competition increases their price to FF20. At the outset this seems unlikely because competition has
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At different price points the volumes then would look something like below - | | | | | | | | | | | | | | | | | | | |LT price |Comp Price |LT Vol |Tot Vol |LT share |LT VC |Tot VC |Tot Sales |Tot Contr | |20 |15 |75000 |700000 |11% |6.8 |510000 |1500000 |990000 | |20 |15 |125000 |700000 |18% |6.49 |811250 |2500000 |1688750 | |20 |15 |150000 |700000 |21% |6.39 |958500 |3000000 |2041500 | |20 |15 |100000 |700000 |14% |6.66 |666000 |2000000 |1334000 | | | | | | | | | | | |20 |20 |140000 |700000 |20% |6.43 |900200 |2800000 |1899800 | |20 |20 |200000 |700000 |29% |6.7 |1340000 |4000000 |2660000 | |20 |20 |213000 |700000 |30% |6.75 |1437750 |4260000 |2822250 | | | | | | | | | | | |15 |15 |150000 |700000 |21% |6.39 |958500 |2250000 |1291500 | |15 |15 |165000 |700000 |24% |6.45 |1064250 |2475000 |1410750 | |15 |15 |175000 |700000 |25% |6.49 |1135750 |2625000 |1489250 | |15 |15 |200000 |700000 |29% |6.69 |1338000 |3000000 |1662000 | |

12. Lille Tissage variable cost curve looks like this at different levels of production. This means a price reduction will increase the volume leading to achievement of market share objectives. However, increase in

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