Case 7 Canco
CANCO Ltd
THE INDUSTRY
The Canadian fradistat industry consists of four companies: Acme Ltd., Beaver Ltd., Canco Ltd. and Deeco Ltd. Fradistats are components in many industrial products.
Acme's products have the highest quality and prices in the industry. While its sales volume and sales income are second-lowest in the industry, it has the highest profits, due to its high profit margins.
Beaver is the industry's largest company. It has the lowest prices and highest sales, but its profits are second to Acme's.
Canco is second-largest in sales but only third in profits, and is regarded as having fallen short of its potential.
Deeco has the lowest sales and profits in the industry by far.
Industry Sales
Total industry sales have grown briskly over the past few years, although the distribution of sales and the rate of growth have varied considerably from region to region, as the following table shows: 2007 Industry Sales Growth 000 units (% of total) Rate
Eastern Market
(Atlantic provinces 3,020 17% slowest and Eastern Quebec)
Central Market
(Ontario and most 9,691 57% average of Quebec)
Western Market
(west of Ontario) 4,266 26% fastest
Total 16,977 100%
Industry Manufacturing
All four companies have manufacturing plants in each region, with industry total production capacity distributed as shown below:
Production Capacity With Overtime (000 units per year) (000 units per year)
Eastern region 4,000 4,800
Central region 11,000 13,200
Western region 4,000 4,800
Total 19,000 22,800
A company can use overtime to increase output in any plant to 20% above the plant's capacity. Overtime wage rates are one and one-half times regular wage rates.
Other Information
Profits per unit sold and total industry profits are highest in the large central Canadian market. One factor that has held down profits in the western market has been
THE INDUSTRY
The Canadian fradistat industry consists of four companies: Acme Ltd., Beaver Ltd., Canco Ltd. and Deeco Ltd. Fradistats are components in many industrial products.
Acme's products have the highest quality and prices in the industry. While its sales volume and sales income are second-lowest in the industry, it has the highest profits, due to its high profit margins.
Beaver is the industry's largest company. It has the lowest prices and highest sales, but its profits are second to Acme's.
Canco is second-largest in sales but only third in profits, and is regarded as having fallen short of its potential.
Deeco has the lowest sales and profits in the industry by far.
Industry Sales
Total industry sales have grown briskly over the past few years, although the distribution of sales and the rate of growth have varied considerably from region to region, as the following table shows: 2007 Industry Sales Growth 000 units (% of total) Rate
Eastern Market
(Atlantic provinces 3,020 17% slowest and Eastern Quebec)
Central Market
(Ontario and most 9,691 57% average of Quebec)
Western Market
(west of Ontario) 4,266 26% fastest
Total 16,977 100%
Industry Manufacturing
All four companies have manufacturing plants in each region, with industry total production capacity distributed as shown below:
Production Capacity With Overtime (000 units per year) (000 units per year)
Eastern region 4,000 4,800
Central region 11,000 13,200
Western region 4,000 4,800
Total 19,000 22,800
A company can use overtime to increase output in any plant to 20% above the plant's capacity. Overtime wage rates are one and one-half times regular wage rates.
Other Information
Profits per unit sold and total industry profits are highest in the large central Canadian market. One factor that has held down profits in the western market has been