Chase of XYZ Laundry is servicing 26 apartment developments. Chases two major co
ID: 1162511 • Letter: C
Question
Chase of XYZ Laundry is servicing 26 apartment developments. Chases two major competitors are Cleanco, which currently services 15 developments, and Beach Services, which performs laundry and cleaning services for 11 developments.
Chase contacted the bank about a loan to expand his business operation (its been in operation 10 years).
During the past year, Chase was able to keep 18 of his original 26 customers. During the same period, he was able to get 1 new customer from Cleanco and 2 new customers from Beach Services. Unfortunately, Chase lost 6 of his original customers to Cleanco and 2 of his original customers to Beach Services during the same year.
Cleanco has kept 80% of its current customers.
Beach Services will keep at least 50% of its customers.
To get the bank loan, he needs to show that he will maintain an adequate share of the market. The Bank is concerned about the recent trends for market share, and they have decided not to give Chase a loan unless he will keep at least 35% of the market share in the long run. What types of equilibrium market shares can Chase expect? If you were an officer of the Bank, would you give Chase a loan?
How can I set up Markov Analysis using QM in Excel?
Explanation / Answer
As the statement state that chase has serving of 26 apartment development, and his rival cpmpetotor was cleanco an avilable service of 15 developments and beach service which performs laundry and cleaning service of 11 developments.
On the other hand assuming that chase has able to keep 18 of his original 26 costumers, 1 new costumers from cleanco and 2 new costumers from beach services.
Therefore assumng that if chase has lost of his 6 original costumers from total costumers of 26.
Then the conditions to whole and qualified for the loan getting is, and also assuming that cleanco has to keep 80% of its current costumers, beach services will kept 50% of its costumers. Thus to get the loan from the bank to run the business both in short and long run smoothly, chase has to keep 35% of the market share which means that chase has to keep aggregate of at least 75 to 45% of its costumers to mantain the market shares at the average rate. Then this will balance the cost of loan and the share of its market to manage both in short and in the long run. Therefore if the conditions set is fulfilled then the, according to the statement chase would smoothly avil the loan from the bank with liquidating certain amount of securites depening on his market shares.