Heidi Merritt
Hello
In the case analysis of South Delaware Coors, it is appropriate to recommend that Larry should move forward and invest in the distributorship. I can see that the decision factors you analyzed showed viability for venture. In Larry’s case, even if he were to set price per gallon at the same level with Budweiser, he could still get profits from the sales. For instance, study E indicated that tax-based approach was effective and would create a demand of 5,762,842 gallons in the market. This demand is achievable by South Delaware Coors. Another analysis I feel you should have talked about is customer analysis. From study G, it is evident that about 70% of the customer in the market intend to consume Coors products. Finally, income statements in both pessimist option and optimist option resulted into positive profits making it a profitable venture. The pessimist option revealed that a 10% decrease in price and a 30% increase in costs will still results into a profit of $ 31,600.
Jordan Godwin
Hi
I also agree with you that South Delaware Coors offers sufficient opportunity for investment. Using study A and B in analyzing market potentiality, the per capita approach indicates that population of Delaware will put beer consumption at 6,323,700 gallons in the year 2000. This massive consumption provides South Delaware Coors with a viable market potential. Price projections also indicated that if prices were set at $ 5.59 per bottle or $2.52 per gallon, then the intention to sell kegs in the ratio of 1:3 kegs per gallon would be profitable. This will also results into a contribution margin of 23%. Finally, study F also indicated that Larry has the potential to meet the cost of investment. He can easily get a bank loan, borrow from friends and use his trust fund to bridge the cost of investment. However, data in study F is not linked to a known industry due to the small sample size and different product lines. Therefore, Larry’s investment situation may be significantly different in estimation.