The purpose of this simulation was to determine the market share of Ford after a ten year period. Data on current market share was compiled by the WSJ and entered into the spreadsheet model. Using functions in Excel and @RISK, random probabilities were generated to determine the likelihood of firms entering and leaving the industry. The percentage of firm’s market share lost to other firms was determined by historical data and random generated proportions with @RISK. Other historical issues taken into consideration was that small firms particularly Toyota and Honda, gained more market share year over year compared to the American “Big 3” who actually lost market share. Due to limitations of the Student Version of @RISK, we’re unable to run the simulation due to the number of inputs. So the simulation was run manually which shows that the market does to continue to grow and all firms will increase their market share but the small firms will be the dominate firms within the industry followed by Ford, GM, and Chrysler. Under current economic conditions it would be more feasible to consider one of the major competitors going out of business compared to one of the smaller competitors and re-run the simulation.
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Auto Industry Simulation |
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Raw Data Input |
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Market Share of Dominate Firms |
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Ford |
0.14 |
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GM |
0.22 |
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Chrysler |
0.11 |
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Data on Small Firms in Industry |
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Number of Firms |
13 |
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Market Share |
0.53 |
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Probability any small firm will exit the market during the year |
0.17 |
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Mean number of new entries during the year (Poisson Distributed) |
0.89 |
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Percentage of market share of each exiter that goes to Ford and the rest going to the remaining automakers (Triangularly Distributed) |
Minimum |
Most Likely |
Maximum |
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0.4 |
0.5 |
0.6 |
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Percentage of companies' market share lost to each other and small firms |
Minimum |
Most Likely |
Maximum |
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Ford |
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GM |
0.003 |
0.006 |
0.01 |
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Chrysler |
0.002 |
0.005 |
0.008 |
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Small Firms |
0.005 |
0.01 |
0.02 |
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GM |
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Ford |
0.005 |
0.008 |
0.01 |
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Chrysler |
0.001 |
0.002 |
0.003 |
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Small Firms |
0.007 |
0.01 |
0.02 |
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Chrysler |
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Ford |
0.005 |
0.007 |
0.01 |
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GM |
0.005 |
0.007 |
0.01 |
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Small Firms |
0.008 |
0.01 |
0.02 |
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Small Firms |
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Ford |
0.002 |
0.003 |
0.005 |
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GM |
0.002 |
0.003 |
0.005 |
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Chrysler |
0.001 |
0.002 |
0.003 |
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Simulation Section |
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Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
Year 6 |
Year 7 |
Year 8 |
Year 9 |
Year 10 |
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Beginning Market Share |
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Ford |
0.14 |
0.178979 |
0.221308 |
0.267777 |
0.319424 |
0.377645 |
0.444372 |
0.481321 |
0.518947 |
0.557308 |
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GM |
0.22 |
0.2312663 |
0.244007 |
0.258506 |
0.275138 |
0.294403 |
0.316991 |
0.330202 |
0.343935 |
0.35821 |
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Chrysler |
0.11 |
0.1218397 |
0.134943 |
0.14958 |
0.166103 |
0.184989 |
0.206896 |
0.219082 |
0.23161 |
0.244497 |
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Small Firms (Combined) |
0.53 |
0.543793 |
0.559553 |
0.577615 |
0.598417 |
0.622536 |
0.650762 |
0.670521 |
0.69128 |
0.713072 |
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Small companies before and after new entries |
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Number of smalls before entries |
13 |
12 |
11 |
10 |
9 |
8 |
7 |
7 |
7 |
7 |
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Number new entries and beginning of year |
1 |
1 |
1 |
1 |
1 |
1 |
1 |
1 |
1 |
1 |
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Total number of small firms |
14 |
13 |
12 |
11 |
10 |
9 |
8 |
8 |
8 |
8 |
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Market Shares Lost During the Year By |
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Ford |
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to GM |
0.000887 |
0.0011335 |
0.001402 |
0.001696 |
0.002023 |
0.002392 |
0.002814 |
0.003048 |
0.003287 |
0.00353 |
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to Chrysler |
0.0007 |
0.0008949 |
0.001107 |
0.001339 |
0.001597 |
0.001888 |
0.002222 |
0.002407 |
0.002595 |
0.002787 |
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to Small Firms |
0.001633 |
0.0020881 |
0.002582 |
0.003124 |
0.003727 |
0.004406 |
0.005184 |
0.005615 |
0.006054 |
0.006502 |
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GM |
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to Ford |
0.001687 |
0.001773 |
0.001871 |
0.001982 |
0.002109 |
0.002257 |
0.00243 |
0.002532 |
0.002637 |
0.002746 |
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to Chrysler |
0.00044 |
0.0004625 |
0.000488 |
0.000517 |
0.00055 |
0.000589 |
0.000634 |
0.00066 |
0.000688 |
0.000716 |
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to Small Firms |
0.002713 |
0.0028523 |
0.003009 |
0.003188 |
0.003393 |
0.003631 |
0.00391 |
0.004072 |
0.004242 |
0.004418 |
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Chrysler |
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to Ford |
0.000807 |
0.0008935 |
0.00099 |
0.001097 |
0.001218 |
0.001357 |
0.001517 |
0.001607 |
0.001698 |
0.001793 |
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to GM |
0.000807 |
0.0008935 |
0.00099 |
0.001097 |
0.001218 |
0.001357 |
0.001517 |
0.001607 |
0.001698 |
0.001793 |
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to Small Firms |
0.001393 |
0.0015433 |
0.001709 |
0.001895 |
0.002104 |
0.002343 |
0.002621 |
0.002775 |
0.002934 |
0.003097 |
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Small Firms |
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to Ford |
0.001767 |
0.0018126 |
0.001865 |
0.001925 |
0.001995 |
0.002075 |
0.002169 |
0.002235 |
0.002304 |
0.002377 |
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to GM |
0.001767 |
0.0018126 |
0.001865 |
0.001925 |
0.001995 |
0.002075 |
0.002169 |
0.002235 |
0.002304 |
0.002377 |
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to Chrysler |
0.00106 |
0.0010876 |
0.001119 |
0.001155 |
0.001197 |
0.001245 |
0.001302 |
0.001341 |
0.001383 |
0.001426 |
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Information on Exiters |
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Market share of small firms before exit |
0.531147 |
0.5455638 |
0.562004 |
0.580816 |
0.602454 |
0.627521 |
0.656837 |
0.677173 |
0.698519 |
0.720909 |
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Number of smalls exiting at end of year |
2.00000 |
2.00000 |
2.00000 |
2.00000 |
2.00000 |
2.00000 |
1.00000 |
1.00000 |
1.00000 |
1.00000 |
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Number of smalls remaining |
12 |
11 |
10 |
9 |
8 |
7 |
7 |
7 |
7 |
7 |
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Combined market share of exiters |
0.07588 |
0.08393 |
0.09367 |
0.10560 |
0.12049 |
0.13945 |
0.08210 |
0.08465 |
0.08731 |
0.09011 |
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Market Share Gained by Remaining Firms From Exiters |
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Ford |
0.03794 |
0.04197 |
0.04683 |
0.05280 |
0.06025 |
0.06972 |
0.04105 |
0.04232 |
0.04366 |
0.04506 |
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GM |
0.012646 |
0.0139888 |
0.015611 |
0.0176 |
0.020082 |
0.023242 |
0.013684 |
0.014108 |
0.014552 |
0.015019 |
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Chrysler |
0.012646 |
0.0139888 |
0.015611 |
0.0176 |
0.020082 |
0.023242 |
0.013684 |
0.014108 |
0.014552 |
0.015019 |
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Small Firms |
0.012646 |
0.0139888 |
0.015611 |
0.0176 |
0.020082 |
0.023242 |
0.013684 |
0.014108 |
0.014552 |
0.015019 |
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Market Share at End of The Year |
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Ford |
0.17898 |
0.22131 |
0.26778 |
0.31942 |
0.37764 |
0.44437 |
0.48132 |
0.51895 |
0.55731 |
0.59646 |
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GM |
0.23127 |
0.24401 |
0.25851 |
0.27514 |
0.29440 |
0.31699 |
0.33020 |
0.34394 |
0.35821 |
0.37305 |
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Chrysler |
0.12184 |
0.13494 |
0.14958 |
0.16610 |
0.18499 |
0.20690 |
0.21908 |
0.23161 |
0.24450 |
0.25776 |
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Small Firms |
0.54379 |
0.55955 |
0.57762 |
0.59842 |
0.62254 |
0.65076 |
0.67052 |
0.69128 |
0.71307 |
0.73593 |
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