HBR case study

1. Beauregard Textile Company
By D. Srinivas, Greatlakes , Chennai
8098663752
1 Market Share Analysis
B C&P M/share
Quarter Price Volume Price Volume Total Vol B C&P
1988 1st 3 124870 3 100000 224870 55.5% 44.5%
2nd 3 126016 3 100000 226016 55.8% 44.2%
3rd 3 125426 3 100000 225426 55.6% 44.4%
4th 3 198863 4 25000 223863 88.8% 11.2%
575175 325000 900175 63.9% 36.1%
1989 1st 3 127201 3 100000 227201 56.0% 44.0%
2nd 3 125277 3 100000 225277 55.6% 44.4%
3rd 3 126124 3 100000 226124 55.8% 44.2%
4th 3 125302 3 100000 225302 55.6% 44.4%
503904 400000 903904 55.7% 44.3%
1990 1st 4 74860 3 150000 224860 33.3% 66.7%
2nd 4 77216 3 150000 227216 34.0% 66.0% market shrinkage
3rd 4 75000 3 150000 225000 33.3% 66.7% 180000 100107 79893
4th 4
2 Profit Analysis if B alone increase the price 0 0 0
Beauregard C&P
Quarter Price Volume cost profit Price Volume cost Profit
1988 1st 3 124870 3.31 -38709.7 3 100000 3.574 -57400
2nd 3 126016 3.31 -39065 3 100000 3.574 -57400
3rd 3 125426 3.31 -38882.1 3 100000 3.574 -57400
4th 3 198863 3.102 -20284 4 25000 6.861 -71525 -14125
-136941 -243725
1989 1st 3 127201 3.31 -39432.3 3 100000 3.574 -57400
2nd 3 125277 3.31 -38835.9 3 100000 3.574 -57400
3rd 3 126124 3.31 -39098.4 3 100000 3.574 -57400
4th 3 125302 3.31 -38843.6 3 100000 3.574 -57400
-156210 -229600
1990 1st 4 74860 3.96 2994.4 3 150000 3.136 -20400
2nd 4 77216 3.96 3088.64 3 150000 3.136 -20400
3rd 4 75000 3.96 3000 3 150000 3.136 -20400
4th 4 75000 3.96 3000 3 150000 3.136 -20400
12083.04 -81600
3 Profit analysis if Both increased Price
Beauregard C&P
Price Volume Cost Profit Price Volume Cost profit
1990 1st 4 74860 3.96 2994.4 3 150000 3.136 -20400
2nd 4 77216 3.96 3088.64 3 150000 3.136 -20400
3rd 4 75000 3.96 3000 3 150000 3.136 -20400
4th 4 100107 3.574 42645.58 4 79893 3.9 7989.3
51728.62 -53210.7
Market Demand decreaes by 20%
4 Profit analysis if C&P alone increases
price Vol Cost Profit price Vol Cost Profit
1990 1st 4 74860 3.96 2994.4 3 150000 3.136 -20400
2nd 4 77216 3.96 3088.64 3 150000 3.136 -20400
3rd 4 75000 3.96 3000 3 150000 3.136 -20400
4th 3 198863 3.102 -20284 4 25000 6.861 -71525
-11201 -132725
5 Profit analysis if both maintains the same price $3
price Vol Cost Profit price Vol Cost Profit 225000
1990 1st 4 74860 3.96 2994.4 3 150000 3.136 -20400 B-M/s 55.70%
2nd 4 77216 3.96 3088.64 3 150000 3.136 -20400 C&P-M/S 44%
3rd 4 75000 3.96 3000 3 150000 3.136 -20400
4th 3 0 3.31 0 3 0 3.574 0
9083.04 -61200

2. Prisoner's dilema
C&P
$4 $3
$4 52000 (55.5%), 12000 (33.5%),
-53000(44.5%) -82000(66.5%)
BTC
.-11000(89%), .-29000*(55.5%),
$3
-130000(11%) -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