In the Capstone Simulation, as in the real world of business, it is always helpful to understand
Question:
In the Capstone Simulation, as in the real world of business, it is always helpful to understand the level of industrial capacity and the related concept of total industry supply.
Given the data found in the Capstone Courier regarding company plant capacity, calculate the total plant capacity (all company's first shift capacity) in the Low-End segment. (5 points)
Follow-up question, assume you are product Bead. What portion (percentage) of the Low-End market does Bead have in total (segment) capacity? Explain your answer. (5 points)
To further clarify the question, we need to be aware of the comparison between our desired market share and our production capacity. For example, if our goal is to capture 30% of a given market, but we only have 10% of the market's production capacity, then it simply is not going to happen. Obviously, goals must be realistic, and companies must build capacity with their realistic market share goals in mind.
As decision-makers, we need to coordinate our strategic objectives (how much market we think we can capture) with our internal scale (size, plant capacity, distribution chain, etc.) in mind, and then build the right amount of plant capacity to make that happen at an efficient cost. It's just a simple reality check, but use it as it works.
Maximum Attainable Market Share = (Company maximum production level + Units in Inventory) / Total Segment Demand (x 100 to convert to %).
Expert Answer:
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
