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Jing Tsong of Bayside Laundry has been providing cleaning and linen service for rental condominiums on the Gulf Coast for over 1 0 years. Currently,
Jing Tsong of Bayside Laundry has been providing cleaning and linen service for rental condominiums on the Gulf Coast for over years. Currently, Jing is servicing condominium developments. Jings two major competitors are Cleanco, which currently services condominium developments, and Beach Services, which performs laundry and cleaning services for condominium developments.
Recently, Jing contacted Bay Bank about a loan to expand business operations. To justify the loan, Jing has kept detailed records of customers as well as the customers that Bayside received from the two major competitors. During the past year, Jing was able to keep of the original customers. During the same period, Jing was able to get new customer from Cleanco and new customers from Beach Services. Unfortunately, Jing lost of the original customers to Cleanco and of the original customers to Beach Services during the same year. Jing has learned that Cleanco has kept of its current customers. Jing also knows that Beach Services will keep at least of its customers. To get the loan from Bay Bank, Jing needs to show the loan officer that they will maintain an adequate share of the market. The officers of Bay Bank are concerned about the recent trends for market share, and they have decided not to give Jing a loan unless they keep at least of the market share in the long run. What types of equilibrium market shares can Jing expect? If you were an officer of Bay Bank, would you give Jing a loan?
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