Essai

Assesstment of Lille Tissages, S.A.
It is thelargestfirm in its segment of the industry. It isfinancially strongand faces weaker competitors. It isexpandingand needs capital. It recentlyraisedthe price if Item 345 to align markup to early(a) fabrics in its product line. Is L.T. really a price drawing card?
Followers are not celebrateing… Perhaps pursuit are confused… Or perhaps they only follow when L.T. charges low prices.

Market Share compend
The market isestimatedto reach 700,000 meters. The sideslip generatepredictionson the market shares for differentcombinations of prices offered.

Market Share Analysis
Demand issensitiveto prices.
When competitors charged a lower price L.T.s share shrunk from 35% to20%.

live Analysis
Are all these costs reallyvariablefor the production of Item 345?

live Analysis
Only variable costs arerelevantfor pricing decisions.
Departamental Indirect expenditure is FF 300,000 at all production volumes, i.e., it is a fixed cost. oecumenic Overhead and Selling and Administrative Expense are each applied to Item 345 using a percentage of other costs.
They are being allocated on an arbitrary basis and severally of the scale of production if Item 345. Remember, for instance, that sales force was on straight salaries and they sold the whole line of products of Lille Tissages.





toll Analysis
unit costs arenot independentof the scale of production.
Actually, the average cost function isU-shaped.

Cost Analysis
FFmeters
150,0006.39
AC

Profitability Analysis
This is the initial price combination but not the onlypossible strategy of these firms!

Profitability Analysis
Answer to question 2:L.T. prefers ahighFF 20 price.
The softer price competition helps L.T. to increase its market share.

Pricing Analysis for Competitors
We need to make some basic assumptions:
Market surface for Item 345 is700,000meters in 2004. Competitors are less efficient (as tell in the case). Lets assume an...If you want to express a full essay, order it on our website: Ordercustompaper.com



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