Please could you help me answer these practice questions in relation to the case study provided?

Read the article: Clover Races to Meet Demand for Yoghurt and answer the following questions.

a) Graphically illustrate the under-supply of yoghurt in market, and carefully explain the impact of this under-supply on the market for yoghurt. (10)

b) Given that the yoghurt market is under-supplied, graphically illustrate and carefully explain the impact of adding a new production line, on the market yoghurt. (10)

c) As a Clover manager concerned about your market share, based on your answers in a) and b), explain two factors you would consider before making a strategic decision about whether to adjust your prices or expand your production capacity. (10)

d) Suppose Clover is split into two divisions: production and distribution. Based on your reading of the article, graphically illustrate and explain how bottlenecks in distribution caused Clover to have excess capacity in production. (10)

e) Graphically illustrate and explain the impact of excess surplus of raw milk, on the market for raw milk and on the market for yoghurt. Explain why, as a Clover manager, you would be concerned about the excessive surplus of raw milk. (10

O koww www Wh Clasur Clover races to meet demand for yoghurt NICK HEDLEY Industrial Writer CLOVER Industries, which started making yoghurts and custards this year, will spend R65m on Installing another yoghurt production line because the one it bought t from Helle has run out of capacity years earlier than expected. Dairy two are marke buying the by 60%-70%, Clover CEO Johann Vorster said yesterday, referring to the firm's inability to match retaller orders. "The launch went much better than we anticipated." Clover had expected the Bloemfontein DairyBelle facility it took over in January to meet yoghurt demand for two years, but demand had outstripped capacity within two months Mr Vorster said the new pro- cessing and packaging line would be installed at the same facility from September, Clover bought DairyBelle's yoghurt and UHT "long-life" milk businesses effective in Jan- uary, after the conclusion of its service agreement with Danone allowed it to start making these and other high-margin products. But while Clover no longer sup DUL plies Danone with raw milk, it still has to phase out its distri- bution and merchandising ser- vices for Danone, to the end of June, to satisfy a Competition Commission ruling Clover was working on find- ing new third parties to dis- tribute for, "but we would ideally like to keep that distribution capacity for ourselves so that we can grow into it, Mr Vorster said. CLOVER INDUSTRIES Half year 2015 2014 Revenue (bn) 4.66 Pretax (Rm) 4.32 2971 Net income (Rm) 210.5 Diluted HEPS() 103.6 Dividend PS (c) 22.5 2172 163.8 732 15.0 when Clover stopped distri buting Danone products. The company is launching a swathe of new products this year, including its Clover Classic yoghurt range in addition to DairyBelle's Fruits of the Forest desserts imported and brand, from Italy yand custards Following its capital invest- ment programme, Clover had excess production capacity with some facilities operating at only 40%-50% of capacity. Mr Vorster said that while distribution capacity was fully used, some of this would be freed Clover said yesterday its headline earnings for the six months ended December grew 41.3% to R199m, as revenues rose 7.9% to R4.7b The company gave up some market share as it hiked selling wire and prices and margins. Mr Vorster said Clover would not raise prices in the six months ending price and would June rather absorb w recent input cost increases. A looming concern was the possibility of a 3% -4% milk sur plus this year, or three times the usual surplus, which would place pressure on prices. NEW PRODUCTS: Clover CEO Johann Vorster addresses the media and analysts yesterday on the company's interim results. Picture: MARTIN RHODES "That would only be from September, October, November. It's part of the cyclicality of the business," Mr Vorster said. bet He said SA experienced a milk shortage in the middle af last year, driving competition for raw milk from farmers and ulti- mately leading to higher prices. This stimulated supply supply as farm- ens grew capacity partly by buy ing out smaller farms as they became more sophisticated. Clover reported a "strong set of first-half results, said said Kagiso Asset Management investment analyst Dirk van Vlaanderen. The co also has a good pipeline of brand exten- new and has had product launches la very positive start to the launch of its Clover yoghurt and custard brands, which should add further support to the second half," Mr van Vlaanderen said. hadayim.co.za O koww www Wh Clasur Clover races to meet demand for yoghurt NICK HEDLEY Industrial Writer CLOVER Industries, which started making yoghurts and custards this year, will spend R65m on Installing another yoghurt production line because the one it bought t from Helle has run out of capacity years earlier than expected. Dairy two are marke buying the by 60%-70%, Clover CEO Johann Vorster said yesterday, referring to the firm's inability to match retaller orders. "The launch went much better than we anticipated." Clover had expected the Bloemfontein DairyBelle facility it took over in January to meet yoghurt demand for two years, but demand had outstripped capacity within two months Mr Vorster said the new pro- cessing and packaging line would be installed at the same facility from September, Clover bought DairyBelle's yoghurt and UHT "long-life" milk businesses effective in Jan- uary, after the conclusion of its service agreement with Danone allowed it to start making these and other high-margin products. But while Clover no longer sup DUL plies Danone with raw milk, it still has to phase out its distri- bution and merchandising ser- vices for Danone, to the end of June, to satisfy a Competition Commission ruling Clover was working on find- ing new third parties to dis- tribute for, "but we would ideally like to keep that distribution capacity for ourselves so that we can grow into it, Mr Vorster said. CLOVER INDUSTRIES Half year 2015 2014 Revenue (bn) 4.66 Pretax (Rm) 4.32 2971 Net income (Rm) 210.5 Diluted HEPS() 103.6 Dividend PS (c) 22.5 2172 163.8 732 15.0 when Clover stopped distri buting Danone products. The company is launching a swathe of new products this year, including its Clover Classic yoghurt range in addition to DairyBelle's Fruits of the Forest desserts imported and brand, from Italy yand custards Following its capital invest- ment programme, Clover had excess production capacity with some facilities operating at only 40%-50% of capacity. Mr Vorster said that while distribution capacity was fully used, some of this would be freed Clover said yesterday its headline earnings for the six months ended December grew 41.3% to R199m, as revenues rose 7.9% to R4.7b The company gave up some market share as it hiked selling wire and prices and margins. Mr Vorster said Clover would not raise prices in the six months ending price and would June rather absorb w recent input cost increases. A looming concern was the possibility of a 3% -4% milk sur plus this year, or three times the usual surplus, which would place pressure on prices. NEW PRODUCTS: Clover CEO Johann Vorster addresses the media and analysts yesterday on the company's interim results. Picture: MARTIN RHODES "That would only be from September, October, November. It's part of the cyclicality of the business," Mr Vorster said. bet He said SA experienced a milk shortage in the middle af last year, driving competition for raw milk from farmers and ulti- mately leading to higher prices. This stimulated supply supply as farm- ens grew capacity partly by buy ing out smaller farms as they became more sophisticated. Clover reported a "strong set of first-half results, said said Kagiso Asset Management investment analyst Dirk van Vlaanderen. The co also has a good pipeline of brand exten- new and has had product launches la very positive start to the launch of its Clover yoghurt and custard brands, which should add further support to the second half," Mr van Vlaanderen said. hadayim.co.za