Managerial Economics – Phaeton Factory, Dresden, DE, EU

Managerial
Economics
Phaeton
Factory, Dresden, DE, EU

Mega
World: Phaeton 1
.youtube.com/watch?v=nd5WGLWNllA”>https://www.youtube.com/watch?v=nd5WGLWNllA
Phaeton
2
.youtube.com/watch?v=E35RvFeHL50″>https://www.youtube.com/watch?v=E35RvFeHL50
Phaeton
3
.youtube.com/watch?v=nM2l0wqNVZ8″>https://www.youtube.com/watch?v=nM2l0wqNVZ8
Bloomberg:
.bloomberg.com/news/articles/2010-08-18/volkswagen-to-bring-back-85-000-phaeton-to-u-s-four-years-after-failure”>http://www.bloomberg.com/news/articles/2010-08-18/volkswagen-to-bring-back-85-000-phaeton-to-u-s-four-years-after-failure

(Ignore the commentaries after each video. Some of it is pure hype and some of it is inappropriate. Answer inside this document after each
question. Answer questions with bullet
points where appropriate. Target your
answers to fit into the space allotted.)

Watch
the videos about the Phaeton VW Assembly plant.
(This is several years old, so
don’t research what actually happened to answer the questions. Try to answer the questions just from
studying the videos, thinking about what you already know, and applying what
was said at the beginning of the semester about marginal cost and marginal
benefit and your readings on production economics.) List
a few of the most important potential advantages of the plant in terms of
contribution to Volkswagon’s revenue?Was
the Dresden Phaeton plant designed to make a profit at the plant level, or was
it serving other corporate objectives?

List what might have been some of those
objectives?

Given
what you see in the videos coupled with what you know about organizations,
markets and market segments, and if you could have foreseen what would happen
to the post-2007 auto market, what concerns would you have had about the Phaeton’s long term
contribution to VW’s profitability?The
Phaeton model was to have the VW brand on it.
If you were in VW management, what advantages and disadvantages are
associated with using the VW brand on the Phaeton models?What advantages and disadvantages might there
have been from bringing the Phaeton to market under a separate brand not
obviously associated with VW?What
kind of price elasticity of demand does VW management seem to have expected
with the Phaeton?What
kind of cross price elasticity of demand for the Phaeton relative to prices of
the Audi A8, did VW management seem to be expecting?Did the apparent cross-price elasticity
expectation imply expected substitutes, complements or independent car models?

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