Case ID: 191058
Solution ID: 36252
Words: 1511
Price $ 75

Beauregard Textile Co Case Solution

Case Solution

Beauregard Textile Company is assessing estimating method for its item T-30 whether it ought to charge $3 or $4 per yard. Its rival is constantly charging the $3 regardless of making misfortunes and troublesome money related condition. On the off chance that Beauregard keeps charging $4, it will have the piece of the overall industry of just 33% while $3, Calhoun and Pritchard has the piece of the pie of around 66%. On the off chance that Beauregard diminishes its cost to $3, it will pick up its clients back as a result of its area leverage, however it won't be beneficial at this cost. This entire case speaks to a circumstance of Prisoner Dilemma where both would be in an ideal situation just on the off chance that if Beauregard proceeds with its cost of $4 while Calhoun and Pritchard additionally build its cost to $4. In this circumstance, business sector size would be diminished by around 20%, yet both these organizations would make benefits.

Excel Calculations

Quarterly Prices and Sales Volumes for T-30 Fabric, 1988-1990

Beauregard’s Estimated Cost per Yard of Triaxx-30 at Various Volumes of Production

Contribution Margin Calculations

Case 1Beauregard Textile Company drops its price to $3 for 4th Quarter

Case 2Beauregard Textile Company Keeps its price to $4 for 4th Quarter

Case 3Beauregard Textile Company Keeps its price to $4 for 4th Quarter while Calhoun and Pritchard raises its prices to $4

Case 4Beauregard Textile Company Keeps its price to $3 for 4th Quarter while Calhoun and Pritchard raises its prices to $4

Questions Covered

  1. What are the financial results for Beauregard Textile Company that Beal and Calloway should be looking at with respect to the present pricing arrangement?
  2. What is the contribution per yard, and what is the total contribution, at the $4 price? How would the numbers look if Beauregard Textile dropped its price to $3.00?( Note that you must determine the relevant costs that should be included in computing the contribution per yard.)
  3. Calhoun and Pritchard presumably is showing a loss at $3.00.  Why then is it not raising its price? (Assume similar costs).
  4. What happens to Calhoun and Pritchard if Beauregard Textile drops its price to $3.00?
  5. What price should Beauregard charge? Why?
  6. How might Beauregard Textile persuade Calhoun and Pritchard to rise its price WITHOUT violating the antitrust laws which prohibit collusion on pricing between competitors?