Zoecon Case Recommendation
The Problem(s). Does the South Delaware Coors distributorship offer sufficient investment potential given Mr. Brownlow’s current business and personal situation?
Recommendation(s). Given Mr. Brownlow’s current business and personal situation operating the South Delaware Coors, Inc. distribution does offer sufficient investment potential. The following explanation is presented to evaluate the decision factors in the case.
Profit Potential. From the studies conducted by Manson and Associates the potential profit can be estimated. The primary objective was to determine the investment potential of the distribution of Coors. As shown in Table 1, in order to break even, the South Delaware Coors distribution would need to sell $247,272 or 224,793 gallons to break even. This amount is not out of reach when calculating the market potential.
The market potential calculated in Table 2. The table uses 2002 estimates to approximate the first full year of production for the South Delaware Coors distribution. When total sale is multiplied with the wholesale price per gallon, the potential market for the distribution is 415,128 gallons. This potential market gallons sold is higher than the break even amount by 185%, creating a potential profit of $456,641.
The industry demand also shows market potential by using the tax approach from Table E of the Manson study. The tax approach shown in Table 3 provides a look into the industry demand of beer in Delaware, where the average revenue of a wholesaler in 1997 was $799,944. Subtracted by the break-even cost, the tax approach shows revenue of $799,944 from the average revenue of a wholesaler. Comparing the break-even cost with the 1998 wholesaler revenue the profit increases 5.8%, with estimated projected profit of $950,111 in 2002.
Market share is shown in table 4. The market shares A, B and C are reflective of the good, better, best scenarios respectively. Even with the worst market share of 436,588.2 gallons, it still
Recommendation(s). Given Mr. Brownlow’s current business and personal situation operating the South Delaware Coors, Inc. distribution does offer sufficient investment potential. The following explanation is presented to evaluate the decision factors in the case.
Profit Potential. From the studies conducted by Manson and Associates the potential profit can be estimated. The primary objective was to determine the investment potential of the distribution of Coors. As shown in Table 1, in order to break even, the South Delaware Coors distribution would need to sell $247,272 or 224,793 gallons to break even. This amount is not out of reach when calculating the market potential.
The market potential calculated in Table 2. The table uses 2002 estimates to approximate the first full year of production for the South Delaware Coors distribution. When total sale is multiplied with the wholesale price per gallon, the potential market for the distribution is 415,128 gallons. This potential market gallons sold is higher than the break even amount by 185%, creating a potential profit of $456,641.
The industry demand also shows market potential by using the tax approach from Table E of the Manson study. The tax approach shown in Table 3 provides a look into the industry demand of beer in Delaware, where the average revenue of a wholesaler in 1997 was $799,944. Subtracted by the break-even cost, the tax approach shows revenue of $799,944 from the average revenue of a wholesaler. Comparing the break-even cost with the 1998 wholesaler revenue the profit increases 5.8%, with estimated projected profit of $950,111 in 2002.
Market share is shown in table 4. The market shares A, B and C are reflective of the good, better, best scenarios respectively. Even with the worst market share of 436,588.2 gallons, it still