Schmeckt Gut plans the market launch for the Schmeckt Besser energy bar in Atollia within the next couple of months.
The Research Department of Schmeckt Gut has conducted a market analysis of Atollia. The results are provided for you in the EXCEL file in Module 4 Assessment.
Based on international sources, the Research Department is comfortable in making the following predictions on average incomes in Atollia, the inflation rate in Atolia and tariff rates on imports
from Industria:
– Average Incomes: could increase by 1% or 3% or 5% or 7%
– Inflation rate: could increase by 2% or 3% or 4% or 5%
– Tariffs on imports from Industria: could increase by 7.5% or 10% or 5% or there may be no tariffs, in which case there would be free trade between Industria and Atolia.
The Board of Schmeckt Gut is interested in obtaining information on how the expected annual demand for the Besser energy bars would be under the Best Case Scenario, Worst Case Scenario or Middle
(Base) Case scenario. To give you an understanding of what the scenarios mean, consider the best case scenario. The “Best Case Scenario” would occur when the annual demand for our energy bars is at
its highest. The question to ask is: “ Which income, inflation and tariff predictions would produce the highest possible demand?“ I am sure with this illustration you can decipher what the “Worst
case scenario” stands for. The Base or Middle Case scenario is when normal or average conditions occur.

write a 3,000 word report to the Board of Director of Schmeckt Gut in which you address the following:
1. From the predictions on incomes, inflation and tariffs given above and using data in the provided EXCEL Spreadsheet (Data for Assessment Module 4) suggest assumptions that would produce
each of the following outcomes: (A) Worst Case Scenario (B) Base or Middle Case Scenario and (C) Best Case Scenario. Justify your reasoning. Consider the information in the Excel spreadsheet given
to be the Base Case Scenario. Based on the Base Case Scenario prepare Excel spreadsheets showing the following variables for the Best Case Scenario and Worst Case scenarios. In fact you should end
up having have three Excel tables each containing the following variables:
Dependent Variable – Annual Demand
Independent Variables: X1 = Average income per person
X2= Tariff on Imports of energy bars
X3 = Number of stores
X4 = Inflation
Each Excel table should be similar in form to the one for the Base Case below but have different figures for the independent variables due to the fact that assumptions will change from case to
case.
Example of Excel Table – Base Case
Annual Demand Average Income per person Tariff on energy bars Number of stores Inflation
Y X1 X2 X3 X4
to create Excel tables for the for the Worst Case and Best Case scenarios as well.
2. Discuss the effects on supply and demand of energy bars as a result of changes in the variables such as incomes, tariffs and inflation. In your answer also make references to the concepts
of aggregate demand and aggregate supply, the Philipps Curve and the Laffer curve.

3. Conduct a multiple regression analysis (in log-linear form) under each of the three scenarios above i.e. Base (Middle) Case, Worst Case and Best Case scenarios. In the interpretation of the
regression results discuss the impact of the different assumptions on the annual demand of Schmeckt Gut energy bars I Atolia.

4. Having performed the scenario analysis make a recommendation to the Board of Directors on what it should do in order to create value for the business as it seeks to expand its market into
Atolia.