Essay Preview: Lille Tissages
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Lille Tissages, S.A.
Located in Lille, France.
Largest textile company in the region.
Department in concern sells only Item 345.
Raised price from FF15 to FF20 in 2002.
Capital is needed for expansion program.
Item 345, Prices and Production Ð²Ð‚™98-Ð²Ð‚™03
Estimated Cost per Meter at Various Volumes of Production
Should Lille Tissages lower the price to FF15?
Option A: Lower price to FF15.
Increase in market share because of superior product at same price.
Competitors would not be able to lower their prices because of higher costs.
Lille Tissages is projected to sell 175,000 meters of Item 345 (According to Sales Director).
Yes: Option A: Lower Price to FF15
If the department that produces Item 345 was a profit center and if you were the manager of that department, would it be to your financial advantage to lower the price?
Staying at FF20 holds the risk of lower contribution margin.
FF20 Contribution Margin