Corporation is a small information systems consulting firm that specializes in helping companies implement sales management software. The market for Sunway's products is very competitive. Tocompete, Sunway must deliver quality service at a low cost. Sunway bills clients in terms of units of workperformed, which depends on the size and complexity of the sales management system. Sunway

presents the following data for the years

2018 and 2019.

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Required

Calculate how much of the change in operating income between

2018

and

2019

is due to industrymarket-size factors, costleadership, and product differentiation. How successful has

Sunway

been in implementing itsstrategy?

Begin by selecting the formula you will use.Then, enter the amounts and calculate the change in operating income due to industrymarket-size factors. Determine whether the amount has a favourable effect on operating income or unfavourable effect. (Hold all decimals in interim calculations. Round your final answer to the nearest whole number. Label the component as favourable"F" or unfavourable"U".)

Change in operating income

x (

/

) =

due to industry market size

x (

/

) =

Before calculating the change in operating income due to productdifferentiation, you must calculate the growth in market share due to product differentiation. Begin by selecting the formula you will use.Then, enter the amounts and calculate the growth in market share due to product differentiation. Determine whether the amount has a favourable effect or an unfavourable effect on operating income. (Round your final answer to the nearest whole number. Label the component as favourable"F" or unfavourable"U".)

Change in operating income

% x

x

=

due to a decline in selling price

% x

x

=

Now, calculate the change in operating income due to product differentiation. Label each component as to whether the amount has a favourable effect or an unfavourable effect on operating income. (Label each component as favourable"F" or unfavourable"U".)

Growth in market share due to product differentiation

Change in operating income due to product differentiation

Before calculating the change in operating income due to costleadership, you must calculate the growth in market share due to productivity improvement and the strategic decision to reduce the selling price. Begin by selecting the formula you will use.Then, enter the amounts and calculate the growth in market share due to the reduction in the selling price. Determine whether the amount has a favourable effect or an unfavourable effect on operating income. (Hold all decimals in interim calculations. Round your final answer to the nearest whole number. Label the component as favourable"F" or unfavourable"U".)

Growth in market share

x (

/

) =

due to reduction in selling price

x (

/

) =

Now, determine the change in operating income due to cost leadership. Determine whether the amount has a favourable effect or an unfavourable effect on operating income. (Label each component as favourable"F" or unfavourable"U".)

Change in operating income due to cost leadership

How successful has

Sunway

been in implementing itsstrategy?

Sunway

has been

has not been

successful in implementing its cost leadership strategy.

Sunway

was unable to pass along increases in labourcosts, due to the decrease in selling price of

$nothing.

However,

Sunway

was able to take advantage of

productivity

sales volume

total revenue

gains to reduceprice, gain marketshare, and increase operating income.