Case 1 G13

ATHENS GLASS WORKS GROUP 13

Introduction: Athens Glass Works (AGW) was a midsized, regional glass company serving several niche markets in the southern United States. he company en!oyed a dominant market position "or non#glare glass in the southern region $ecause o" its "ast and relia$le service, willingness to deliver glass on short notice at no e%tra charge whatsoever, provision o" an e%ceptionally high &uality non# glare glass with little loss o" light and no $lemishes, operation o" its own 'eet o" vehicles in order to eciently manage delivery times and to provide reduced shipping charges and nally AGW*s sales sta+ was highly regarded as e%ceptional "or it help"ul and generous service to its customers. owever in -/, the company $ecause o" the increased pressure to improve margins, raised the price its non#glare glass "rom 0/.-1 s&.2"t to 0/.34 s&.2"t.  he pro$lem at hand "or 5hristina 6atthews, the product manager "or non# glare glass at AGW and 7o$ert Ale%ander, the controller o" the Specialty Glass division at AGW, is to decide whether to continue with the present price o" 0/.34 or revert $ack to the old price o" 0/.-1. 8%hi$it / presents an analysis on the varia$le cost and its impact on the unit contri$ution margin and the total contri$ution margin.  he team at AGW was presented with two options9 -. Whether to return to the previous price o" 0/.-1 /. Whether to maintain a price o" 0/.34 According to 5hristina, the total regional volume "or the "ourth &uarter o" -3 was e%pected to $e /:,::: s&.2"t and she $elieved that i" the company were to revert $ack to the old price o" 0/.-1, it could increase a ma!or portion o" the market share with sales o" /;1,::: s&.2"t. owever, i" the company decides to maintain the current price o" 0/.34, it would risk losing sales to up to -1:,::: s&.2"t.

At a price o" 0/.-1, the company maintains a market share o" /.