A finished DBA-815 Topic 3 rival cost structure comparison example, building two firms' costs per member at two horizons and deriving which prices each can sustain, reach temporarily or never reach. Searches like "dba 815 topic 3 assignment example", "dba815 topic 3 sample" and "dba-815 topic 3 example" land here.
What a finished DBA-815 Topic 3 rival cost structure comparison looks like
Two cost builds sit side by side in the finished comparison, figures illustrative. A typical chain club carries about $91,000 a month in lease, staff, utilities and its share of central costs, and serves some 2,700 members, so fixed cost runs near $34 per member, plus about $12 variable. The entrant's larger, lightly staffed club carries about $55,000 and a variable cost near $4, so it breaks even at $15 once it holds 5,000 members. Horizon does the work. Over the next year the chain's leases and core staff are committed, so its floor is the $12 it can avoid, and it could match almost any price for months. Over three years nearly everything becomes avoidable and the floor rises toward $46. The verdict: the chain can fight a short price war and cannot survive a long one.
How a DBA-815 Topic 3 example is structured
Each firm's costs are built line by line before any price is discussed, so the comparison rests on structure rather than on the entrant's advertising. The chain's club comes first, divided into lease, staff, utilities and a share of central costs. The entrant's model follows, estimated from its public format: a larger floor, a small staff, no classes, and hours without staff overnight. Both builds are then restated at two horizons, twelve months and three years, marking which lines become avoidable as leases reach renewal. Scale gets its own section, showing how the entrant's cost per member falls with volume and why its $15 price depends on reaching 5,000 members a club. Scope follows, arguing that classes, childcare and a pool share the chain's space and staff in ways the entrant could copy only by adopting the chain's cost structure. The paper closes on the moves each structure permits.
Two cost builds, line by line
The chain's club and the entrant's club are costed on the same lines, so every difference in the comparison traces to a specific item.
Why $15 needs 5,000 members
With about $55,000 of monthly fixed cost and $4 variable, the entrant covers its costs at $15 only once each club passes 5,000 members.
A twelve-month floor near $12
Leases and core staff are committed for the year, so the chain can avoid only its variable cost and almost any price covers what closing would save.
A three-year floor near $46
Once leases reach renewal and staffing can be resized, nearly every cost is avoidable, and a price below about $46 per member stops being sustainable.
Scope the entrant cannot copy cheaply
Classes, childcare and a pool share the chain's floor and staff, and the entrant could add them only by taking on the costs its price depends on avoiding.
Moves each structure permits
The entrant can hold $15 indefinitely at volume, the chain can undercut only until its leases renew, and so the chain's durable response is its bundle.
Where marks go in DBA-815 Topic 3
Cost comparisons that stop at the entrant's low price, without building its cost per member, cannot say whether $15 is a strategy or a promotion. Papers reasoning about the chain's costs without a horizon can prove anything, since a twelve-month view makes nearly every price look affordable and a three-year view makes most look ruinous. A frequent slip counts past equipment purchases in the price floor; that money is sunk and plays no part in what the chain can charge. Scale is often asserted rather than computed, when the 5,000-member breakeven is what reveals the entrant's dependence on volume. Treating classes and childcare as extra cost, rather than as scope economies that share fixed space, misreads where the chain's advantage lies. Recommendations to match the entrant's price ignore the three-year floor the paper itself derived.
Get a DBA-815 Topic 3 example written to your instructions
Send the DBA-815 Topic 3 instructions and the rubric your classroom posts, with any cost data or case the assignment names. A custom example is written to those criteria, with both firms' costs built line by line, floors stated at two horizons, scale and scope computed and each structure's permitted moves set out, back in 24 to 48 hours. The first one is free.
DBA-815 Topic 3 questions, answered
What is the difference between economies of scale and scope?
Economies of scale lower cost per unit as one activity grows, as when the entrant spreads a fixed club budget across more members. Economies of scope lower cost when different activities share inputs, as when the chain's classes, childcare and pool use the same building and front desk. The example uses scale to explain the entrant's price and scope to explain what the chain can offer that the entrant cannot cheaply add.
Why build costs at two horizons?
Because which costs are fixed depends on how far ahead the decision looks. Within a year the chain's leases and core staff are committed, so any price above variable cost covers everything it could avoid. Across three years those commitments expire and must be renewed or dropped, so the sustainable price has to cover them. A single horizon hides one of these two facts, and the example needs both to judge a price war.
Should the chain match the entrant's $15 price?
Not on these costs. It could hold such a price for months while its commitments run, but not beyond lease renewal, where its full cost per member sits near $46 and the entrant's near $13 at volume. A match the chain cannot sustain teaches members to expect a price it will later withdraw. The example points the response toward the bundle of classes and childcare that the entrant's structure excludes.