Case Study # 1: South Delaware Coors, Inc. Essay

626 Words Oct 30th, 2008 3 Pages
Case Study # 1: South Delaware Coors, Inc.
Analysis Summary

Main Problems

Two issues are present in the case. The first is a decision on what research should be conducted by Manson and Associates to allow Larry Brownlow to estimate the feasibility of a Coors beer distributorship for a two-county area in Delaware. This issue is evident, even stressed, throughout the case. The second issue is a decision on whether or not the distributorship is feasible or, in other words, a go/no-go decision by Brownlow regarding his application. This issue is largely implicit in the case.

Decision-Making Process
The framework used in this note is organized around the estimates of industry demand, market share, costs, and performance. All data
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2. Market Share Projections
Table C, containing market share projections, is straightforward and needs little explanation here. Table C data are crucial to making a sales projection for the distributorship.
3. Costs
Estimates of fixed costs are reasonably straightforward and are given in the case (p.280), a total of $250,000 ($160,000+$90,000).
To estimate variable costs, Tables F and I are needed. Table F shows the cost of goods sold averages 77.1% of sales (variable cost); Table I shows an average wholesale price for the seven competing brands of about $3.16 per six pack (about one gallon).
In addition to selling beer in bottles and cans, the distributorship will also sell kegs (contribution margin of 1/3 of beer in bottles and cans). The case states (p. 280) that keg beer prices at the wholesale level were about 45% of prices for beer in bottles and cans. These two facts can be combined with wholesale costs and prices for beer in bottles and cans to produce an overall weighted average contribution. 4. Performance
To conclude on the feasibility of the distributorship, you should first calculate a breakeven point (in gallons) and compare to the industry demand and expected market shares. From data in the case and this note:
Breakeven = = = 403,225 gallons
Breakeven Market Share = = 6.5% < expected market share of 8.9%
5. Conclusion
Larry Brownlow should apply for the distributorship with the results of studies A, B,

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