Age Effect Versus Cohert Effect Knowingly or Unknowingly Both Age and Cohert Effects Have a Substantial Effect on the Behavioural Pattern of Any Individual. the Age Effect Is Primarily Due to the Chronological Age and

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TruckTex is a manufacturer of chassis skirts for over-the-road long and short haul trailers. The industry is very competitive with dozens of companies. The recession that started in 2008 with mortgage market failures has hurt TruckTex tremendously. With the downturn in housing starts, TruckTex’s largest customer, a furniture company, was shipping less and less furniture and fixtures. This consequently hurt TruckTex’s top and bottom lines. In fact, TruckTex is considering filing for Chapter 11 bankruptcy.

But CFO Roger Martin has one or two last things to try before going the bankruptcy route. Through a golfing buddy, Martin knew that Baveritt Express was considering equipping its entire fleet with chassis skirts. He also knew that Freightwing Corporation (makers of AeroFlex skirts) was perhaps interested in buying all outstanding stock of his firm, (TruckTex, Inc.) in order to grow their presence in the chassis skirt space. One reason Freightwing was interested in merging with TruckTex was because the two firms had similar cost structures and similar price points on their products and services. Freightwing obviously thought there would be synergies in combining the two firms.

But Roger Martin is not quite ready to sell to Freightwing or file Chapter 11. He has a two-pronged strategy. While he’s certain the installation costs of his products are similar to Freightwing’s and cannot be reduced, he believes he can possibly cut the baseline cost per trailer and get all of Baveritt Express’s business. Such a “penetration price” policy had been used successfully by other companies in many industries. He has approached John Bostwick (CFO of Baveritt) with an interesting proposal. In exchange for Baveritt’s capital budgeting analysis to date, Martin would analyze what baseline price TruckTex would have to offer Baveritt (to equip their 262 trailers) such that Baveritt comes out better dealing with TruckTex rather than buying TrailerBlade and...
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