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1、FortheexclusiveuseofH.VASUPURAMHarvardBusinessSchool9-191-058October19,1990BeauregardTextileCompanyInSeptember1990,JoelCallowayandClarenceBeal,Jr.,salesmanagerandcontrollerrespectivelyoftheBeauregardTextileCompany,mettopreparerecommendationsforfourth-quarterfabric
2、prices.Whenapprovedbytheexecutivecommittee,fabricpriceswerepublishedandmailedtocustomers.Thesepriceswereconsideredfirmforthequarter.Beauregardwasoneofthelargestfirmsinitssegmentofthetextileindustrywithannualsalesofabout$82million.Companysalespersonswerepaidstraigh
3、tsalariesandsoldthefulllineoffabrics.Onthisoccasion,CallowayandBealwereparticularlyconcernedonhowtopriceTriaxx-30,ablendofnylon,polypropelene,andrayonusedforspecialoutdoorapplications.InJanuary1990,BeauregardhadraiseditspriceforTriaxx-30from$3to$4ayardinordertobri
4、ngitsprofitmarginuptothatforotherproducts.Thisactionreflectedinpartanadjustmenttorecentincreasesincosts.Itwasalsomotivatedbyadirectivefromtheboardofdirectorsthaturgedmanagementtostrengthenthecompany’sworkingcapitalpositionsoastoensuretheavailabilityofadequatefunds
5、forarecentlyapprovedlong-termplantmodernizationandexpansionprogram.(Triaxx-30waswovenonspecialequipmentthatcouldnotbeusedforotherpurposes.)Calhoun&PritchardInc.,theonlysignificantalternativesupplierofT-30(thecommontradereferenceforTriaxx-30-typefabric),hadhelditsp
6、riceat$3.(Calhoun&PritchardnormallywaitedforBeauregardtoannouncefabricpricesbeforemailingitsownpricelist.)Asaresult,Beauregardhadlostmarketshare.AsthesaleshistoryinExhibit1shows,thetotalmarketforT-30fabrichadremainedremarkablystableforthelastthreeyearsatabout225,0
7、00yardsperquarter.Thesedataalsoshowedsomecustomerstobeprice-sensitive,switchingimmediatelytothelowcostsupplier.Basedonconversationswithhissalespeople,CallowaybelievedthatanumberofcustomerswoulddiscontinueorrestricttheiruseofT-30fabricifitwerenolongeravailableat$3,
8、reducingtheoveralldemandby20%.Thefollowingexcerptsfromthediscussionrevealsomeofthetwomen’sunderstandingandconcernsabouttheTriaxx-30pricingdecision:Callo
