SENECA PAPER COMPANY

We believe that Seneca Paper Company should keep the increased price of its products as
it is a ‘leader-follower’ market and it can consider some recommendations which are
given as follows.

Recommendations:

1) Giving incentives to Jobbers:

a) In the form of increasing the protection period to 45 days.

b) Selling them the product at a discounted price if they agree to bind in a contract of
buying at least some fixed quantity of the product.

If they agree, then negotiation with the raw materials suppliers to decrease their price if
we buy their products:

Cost Margin as compared

price Selling Price Profit to last quoted price
Current price 12.16 12.8 0.64
Best case scenario 10.944 12.416 1.472 130
Medium case
scenario 11.9168 12.672 0.7552 18
Worst case scenario n/c 12.672 0.512 -20

2) Introducing a new product which is in the Medium- Super standard category.

Assume that introduction of this new product will convert the consumer of standard quality
product to buy the new product.

Increase in
New product at $12.8/bundle revenues
Best case scenario(40% conversion) $.24/bundle
Medium case scenario(10% conversion) $.06/bundle

Worst case scenario(less than 5% conversion) $.03/bundle