Chapter 12, Problem 12.35P

Analysis of growth, price-recovery, and productivity components (continuation of 12-34).

Suppose that during 2017, the market for DVD players grew 10%. All increases in market share (that is, sales increases greater than 10%) and decreases in the selling price of the Orlicon are the result of Scott’s strategic actions.

Required

Calculate how much of the change in operating income from 2016 to 2017 is due to the industry-market-size factor, product differentiation, and cost leadership. How does this relate to Scott’s strategy and its success in implementation? Explain.