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Beauregard Textile Company
Beauregard Textile Company
Introduction:
In September 1990, Joel Calloway and Clarence Beal, met to prepare recommendations
for fourth-quarter fabric prices
Beauregard was one of the largest firms in its segment of the textile industry
It had an annual sales of about $82 million
Company’s sales person were paid straight salary
Product: Triaxx 30, blend of nylon, polypropylene, and rayon used for special outdoor
applications
Situation:
Due to the increase in the costs, It had raised price of Triaxx from $3 to $4 to increase
profit margins
Ensure that availability of funds for the plant modernization and expansion program by
strengthening the working capital
Calhoun & Pritchard Inc., another supplier, had priced its product at $ which resulted in
a loss of market share by Beauregard.
Market share was stable for T-30 for three years
Customer were price sensitive
Cost of Triaxx was comparable to that of T-30
Calhoun & Pritchard Inc., was in a tight financial situation
Conclusion:
If BTC is at $3, it is quite likely that C&P will be at $3 as an increase to $4 reduces both market
share and profitability. This is due to the local presence of BTC, as described in the case study. If
BTC rises to $4, C&P tries to price at $4 to reduce the loss. If C&P gives away the profit and
Market Share, it must be at $3 by taking a loss. Regardless, BTC is profitable. So, it is preferable
for BTC to raise the price.
Submitted by:
PGP12101, Sec-B.