Before attempting the exercise, click here to read the Global Chemical's COVID-19 Capacity Decision case study. Global Chemicals' capacity decisions focused on A. statistical modeling. B. competitors leaving the industry. C. trade association data. D. market and profitability data. In 2015 , Global Chemical, like many firms in the petrochemical industry, recognized the growing worldwide demand for ethylene, a basic ingredient in the huge array of chemical products using polyethylene. Polyethylene appears in products ranging from hygiene and health care to packaging, agriculture, construction, and automotive. It also sees extensive use in industrial applications. With a gusher of raw material being unlocked by the American-led shaledrilling boom (commonly known as fracking), the excess gas by-product produced from oil wells in the Permian Basin of west Texas was being given away. This meant excellent margins for ethylene, selling at one point for an exceptional $1,300 per metric ton. Global's pro forma forecast was looking better than ever, but its ethylene capacity was limited. With new state-of-the art facilities taking advantage of low-cost natural gas, ethylene and related raw materials should yield lower costs for the plastics industry, driving down its cost and expanding worldwide demand for polyethylene-based end products. Further, by 2017 new corporate tax laws made investments in the U.S. look competitive internationally. As an added bonus, interest rates were low and were expected to remain so, suggesting an excellent return on investment in new facilities. To Global's management and many others in the industry, it looked like a Goldilocks scenario. The management team at Global, like most of the petrochemical industry, poured billions of dollars into new petrochemical facilities. Global, for instance, made a $3 billion investment in a new Gulf Coast facility to produce ethylene. However, in the fall of 2020, Emma Gibson, president of the ethylene division of Global Chemical, was reminded of how dynamic markets and the world economy are-Global's performance was declining, and she wondered what had happened. As she dug into the financial and sales data, she realized that: - The industry's ethylene production capacity rose in just the last 5 years from about 28 million metric tons to over 40 However, in the fall of 2020 , Emma Gibson, president of the ethylene division of Global Chemical, was reminded of how dynamic markets and the world economy are-Global's performance was declining, and she wondered what had happened. As she dug into the financial and sales data, she realized that: - The industry's ethylene production capacity rose in just the last 5 years from about 28 million metric tons to over 40 million metric tons. - COVID-19 reduced shipping, air travel, trucking, and auto travel, putting added downward pressure on petroleum prices. - The lower oil prices closed down many of the shale producers, choking off excess gas produced from west Texas. The result: the end of cheap raw material from west Texas wells. - COVID-19 shutdowns also hit the world economy generally, severely and negatively impacting polyethylene demand for the large industrial, construction, and automotive segments of the market. - These market losses were counteracted by modest increases in the polyethylene demand in the healthcare, packaging, and agriculture markets. Emma knew she needed some good answers for next Monday's board meeting. And as she pondered Global's losses reflected in the current financial statements, she asked herself the following questions