Introduction:

1.The goal of the project is applying the knowledge learned in the classroom to decisions made by a company that are influenced by the industry competitive dynamics. Debating certain strategic options are dependent on understanding demand for its product, its cost structure, industry demand, its competition advantage, its pricing strategy, and its weaknesses.

2.Your team comprises of the executive leadership group of ABC Drinks, Inc. The company has one competitor, XYZ Drinks, Inc. The marketing department has provided demand estimates for weekly sales at different price points and the operations department has given the costs associated with different level of production. The strategy team has given the same information for XYZ Drinks, Inc. To make appropriate pricing and production decisions, a full demand, cost, and industry analysis should be completed.

Methodology:

Incorporate the following information into the analysis:

ABC Drinks, Inc.:

Demand: Price Quantity (per Week)

3.00 2,000

2.75 2,500

2.50 3,000

2.25 3,500

2.00 4,000

1.75 4,500

1.50 5,000

Supply: Fixed Costs: 750

Variable Cost per unit (not employees): 0.32

Variable Cost per employee: 300

Quantity (per Week) Employees

2,000 11

2,500 15

3,000 18

3,500 20

4,000 23

4,500 27

5,000 32

XYZ Drinks, Inc.:

Demand: Price Quantity (per Week)

3.00 3,000

2.75 3,250

2.50 3,500

2.25 3,750

2.00 4,000

1.75 4,250

1.50 4,500

Supply: Fixed Costs: 750

Variable Cost per unit (not employees): 0.26

Variable Cost per employee: 310

Quantity (per Week) Employees

2,000 11

2,500 15

3,000 18

3,500 20

4,000 23

4,500 27

5,000 32

Using the above data answer these Questions:

A) Determine optimal price and quantity for ABC Drinks, Inc., and industry

B) Calculate elasticity for ABC Drinks, Inc., and industry

along demand curve

C) Analyze the cost structure of ABC Drinks, Inc., and industry

D) Characterize the competitive structure of the industry

E) Identify strategy(ies) to give ABC Drinks, Inc., monopolistic rents

F) Analyze benefits gained for ABC Drinks, Inc. by achieving a monopoly