Sparta Glass
Case Evaluation
By: Julian Vu
Table of Contents
1.0
Executive Summary
2.0
Industry Survey
2.1
Assumptions
2.2
Missing Information
3.0
Reflexive Reasoning
3.1
Decision Diagram
3.2
Relevant Costing
4.0
Issues framed within context
5.0
Appendices
1.0
Executive Summary
Sparta Glass Products is seeking to expand their operations. In order
to finance the proposed expansion, SGP has raised per unit prices of
non-glare glass by 9.76%, with the hope that competitors will follow
suit.
SGP’s competition have retained their prices, and SGP is
subsequently losing sales and market share. SGP must now consider
whether to lower prices to match competitors, or whether to retain the
higher price.
2.0
Industry Survey and Company Profile
Sparta Glass (SGP) is cited as a midsized, regional glass company.
Evidence in the text suggests that SGP is the market leader within its
region. SGP is currently know within their markets to have fast
reliable service, the ability to perform specialized custom jobs that
do not fall within the industry-standard delivery size, a product that
has numerous quality controls on it, and also, efficient sales and
logistics staff. While no numbers were given on the amount of
competitors SGP faces, there is evidence as to how much market share
SGP has within their regional markets (Exhibit 1).
2.1
Assumptions
The following are assumptions made from the case:
1.
SGP wants to acquire capital in order to finance a long-term
expansion and modernization program.
2.
In order to raise capital, the price increase is necessary.
3.
Competition has not, and will not raise prices to match.
4.
As a result of the price increase, SGP has been rapidly losing
market share.
5.
If SGP reverts back to their $2.15 price, they will nearly
double market share (25.23%  42.64%). {Note: Over two
periods, not one}
6.