SPSS Case Study Question 3: Victoria Chemicals

Case Question 3
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Case Question 3
The director of sales is suggesting that the company, Victoria Chemicals, shifts production capacity of polypropylene from Rotterdam to Merseyside in order to prevent customers from buying products from competitors. This way, Merseyside would cannibalize Rotterdam as production activities would shift to the former plant. This would amount to market cannibalization. Cannibalization in this case is when a new project reduces cash flow of an already existing one (Megginson, Smart & Lucey, 2008). In the case of Victoria Chemicals, the Merseyside plant would reduce cash flows of the Rotterdam plant.
Market cannibalization can help the company increase its market share particularly given the fact that completion in Merseyside is high and production capacity a...