1. Should Beauregard Textile Company announce a price of $3.00 or $4.00 per yard for Triaxx-30? 2. What are the financial results for Beauregard Textile Company that Beal and Calloway should be looking at with respect to the present pricing arrangement ? 3. How would the numbers look if Beauregard dropped its price to $3.00 ? 4. Calhoun and Pritchard presumably is showing a loss at $3.00 . Why then is it not raising its price ? What happens to Calhoun and Pritchard if Beauregard drops its price to $3.00? Problem Identification Beauregard is a textile company with annual sales of about $82 million making it one of the largest firms in its segment. Currently, due to recent increase in costs the price of Triaxx-30, a fabric manufactured by BTC, has been increased from $3 to $4. The current supplier market for Triaxx-30 (T30) is a duopoly with Calhoun & Pritchard Inc. as the only other supplier. Since C & P have retained their price of $3 BTC has lost its market share. The current problem faced by the BTC executives is whether to reduce the price back to $3 so as to regain market or to remain at $4 in order to maintain profits. Situation Analysis Traditionally BTC owned close to 56% of the market share for Triaxx-30, while C & P owned 44% of it. Due to the increase in costs incurred by BTC they were forced to increase their price from $3 to $4. The customers being price sensitive immediately shifted towards C & P which resulted in loss of market share for BTC. Now BTC has 33% of the market share while C & P has 66%. C & P generally waits for BTC to announce their price list before publishing their own price list so as to remain at par with the competition. But when BTC increased their price C &P refused to follow suit and maintained their price level . Since the market is inherently price sensitive it is estimated that the market size will shrink by 20 % if both suppliers increase their price levels Analysis of alternatives The 3 available alternatives are