Working on this problem and not sure if the number would be negative or positive. I got a positive number so not sure if it's 100% correct. The overall question is listed below.

Having just arrived back from our quarterly management meeting, I have a significant strategic decision I would like you to help me analyze.While we have historically been a leader in supplying small businesses with their Personal Computer (PC) needs, the size and margins of the market have declined significantly to the point where today we only hold 45% share of the $22 billion market, and industry margins are a slim 6%.

Our rival, Corbin Computers has pursued a more diversified strategy. In addition to holding 55% of the small business focused PC market and accompanying profits, last year CC also entered the $6 billion tablet market and currently enjoys 100% share with lucrative 17% margins.

We are considering introducing a competing tablet product to grow profits. Based on discussion among management we believe CC will react in one of two ways: 1) CC might trigger a price war which would limit us to a 13% share of tablet sales and reduce margins on tablets to 11% and PC's to 4%, or 2) CC may acquiesce allowing us to gain an estimated 32% share of the tablet market at current margins.In both situations, we expect total market size to remain constant as small business purchasing is not susceptible to large fluctuations in the purchasing cycle.

Management is very weary of a price war knowing that it could negatively impact our overall profits, and therefore is leaning toward not introducing the tablet. However, before making this decision we would greatly appreciate your analysis and guidance regarding this decision.

Thanks in advance,

Kyle Adams

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