=+15-28 KKK Analysis of growth, price-recovery and productivity components (continuation of 15-27)

OBJECTIVE 4 Suppose that during 2015 the market for implementing sales-management software increases by 5% and that Bytes Ltd experiences a 1% decline in selling prices. Assume that any further decreases in selling price and increases in market share of more than 5% are the result of strategic choices by Bytes Ltd’s management to implement their strategy.

Required Calculate how much of the change in operating profit from 2014 to 2015 is due to the industry market-size factor, cost leadership and product differentiation. How successful has Bytes Ltd been in implementing its strategy? Explain.