2104 AFE: ABCLTD is a medium size company - Management Accounting

Internal Code: MAS762

Management Accounting:

ABC LTD is a medium size company manufacturing two electronic household products - X and Y for the last 10 years. It has been operating in a market where four other companies produce and sell products which are similar to those of ABC Ltd. For the last few years, ABC Ltd has been enjoying 40% of the market share until the end of 2014 and has been known as a reliable company. Starting from the beginning of 2015, ABCLtd’s sales volume has been slowly declining and by the end of 2015, the amount of sales for the year was 5% less than its 2014 sales. Naturally, ABCLtd’s management got concerned and appointed a new chief financial officer (CFO) and put the CFO in charge of ABCLtd’s Finance Department. The Company wants to: (a) regain its lost market share, and (b) increase its market share to 45% of the total market by 2021. The CFO has been asked to come up with a strategy to regain and increase the Company’s market share as stated above under (a) and (b) Question: (1). Explain with justifications your assessment of the Company’s 2015 performance based on the data and information provided above. Show your computations supporting your assessment on 2) Identify and explain with backup data/justification how ABC Ltd may be able to regain its lost market share and increase the share to 45% by 2021. Explain how your suggested action(s) will achieve the Company’s objectives.