Forecast Period 2 – Year of stable economic recovery
It is assumed that the GDP will raise by 3%. Market specialists expect an increase in inflation by 2%. The costs of living are supposed to rise by 2%, but the wages and salaries will remain unchanged. The high unemployment leads to a lack of qualified employees. The average costs for hiring an employee will increase to 8.000€ per employee.
Market 1
The demand for copy 1 is expected to increase by 4-6%. There is a bulk buyer who is willing to purchase up to 8.000 copiers for 2.350€/unit. The European Union has made a request for bids for 7.000 copiers.
Market 2 (foreign market)
There is an estimated market volume of about 100 – 120mFCU (1FCU = 1,50 EUR). The delivery to Market 1 has priority over delivery to Market 2.
Product 1 - new
The companies have to decide whether they want to start development of the new product or just concentrate on their old product. Before the new product can be offered for sale it has to be better than the old one in terms of technological and ecological aspects. The new product substitutes the old product.
Period 2 – Gaining security
Group A
In this business year every company was able to reach a positive annual surplus, especially company A4 has made a profit of 19.2 million after tax because they were able to meet the challenges of the second market. The average price of the products increased about 30,00 EUR. The enterprises have been able to justify this situation with the better quality of their products. Company A1 and A4 are the most successful enterprises in the market concerning their net income for this period as well as their technology and ecology indices. However, all companies of the market were able to increase their indices.
Every company except company A5 expanded into the foreign market. It seems that company A4 plans to focus on the foreign market because they gained a market share of more than 50 %. Perhaps company A5 planned to conquer the foreign market but they were not able to deliver any products. They sold every unit on the domestic market. All other companies have made a profit of the incompetence of deliverance of company A5 on the foreign market. Nevertheless the companies were not capable to accommodate demand on the foreign market.
Group B
Company B1 and B3 left the price at the same level. Company B2 and B5 decreased the price. Only Company B4 rose its price. Company B1 tried to stable their position as a premium seller by having the highest advertisement budget and highest technology index. So, they sticked to their given strategy. They tripled their budget on corporate image. But they were still not the leader. Company B2 tried to lower their costs by reducing expenditures in corporate image, technology and ecology. The low price led to a benchmark in customer satisfaction. This period they had the necessary sales stuff for selling all the potential sales.
All the other companies managed to get rid of the stock and could fulfil their potential sales. Company B3 still didn’t manage to become benchmark in ecology. This position belonged to Company B5. As a result, Company B1, B3, B4 and B5 just remained on their safe strategy. Company B2 achieved the highest EBIT ever seen by the shareholders by following the risky price leadership strategy. The finance and accounting department did a great job to offer the products on such a low price level!
