MANAGERIAL ECONOMICS PROJECT

COMPANY NAME:CHEVROLET BATCH:B-10

SUBMITTED BY :1. NUPUR GUPTA (10104736) 2.HARPREET SINGH CHAWLA(10104657) 3.ATRI SHARMA(10104671) 4.DIVYA GAUTAM(10104673) 5.NUPUR(10104676)

ACKNOWLEDGEMENT
We are extremely thankful and would like to express out deep sense of gratitude to our teacher Ms. KANUPRIYA MISRA BAKHRU and the PD Department for their continuous and tremendous guidance and support provided in the making of this project without whom, this project could not have been completed successfully. Their sincere efforts in explaining the concept of forecasting and its various techniques used here helped us immensely in understanding this topic thoroughly.

INDEX

INTRODUCION History Competitors Forecasting methods Forecasting tool adopted Forecasting for sales Forecasting for profit Macroeconomic Issue: Greek Economy Conclusion Bibliography

INTRODUCTION:
Chevrolet has produced cars of distinct style and flavor over the years, some of them being the El Camino (1958), the F-body Camaro (1966) and the Chevette (1975). However, in addition to the pick-up truck, the Chevrolet car that first comes to mind is the Corvette, which was introduced in 1953 as the first volume production sports car and the first car to be made with a plastic body. In 2003, the Corvette celebrated its 50th birthday. Some 5,000 Corvettes were driven by their owners from all 50 states, meeting at the National Corvette Museum in Bowling Green, Kentucky.

HISTORY :
Louis Chevrolet was born in La Chaux-de-Fondson, Switzerland in 1878. As a young man, Chevrolet had a passion for all things automotive and excelled as an auto mechanic. In 1899, he got a job in working for car manufacturer Darracq, where he was thoroughly educated in the mechanics behind the combustion engine. This job permitted him to earn enough money to immigrate to North America. In New York, Chevrolet continued to work in automobile workshops and also began to race Buick cars. It was his racing career that would put him in the path of William C. Durant, founder of General Motors. The two men formed Chevrolet Motor Car Company in 1911. But sadly, theirs was to be a short-lived partnership due to creative differences. Chevrolet wanted to produce high-end, luxury automobiles, while Durant wanted to produce affordable cars for common people. Chevrolet sold his interest in the company to Durant in 1913.

PICKUPS:

The Chevrolet pickup truck has been a perennial second-place finisher in sales to the Ford FSeries truck. Chevy truck owners hold the belief that a truck's styling should be understated with a hint of elegance and avoid brutish looks, making Chevrolet a distinct alternative to its rivals.

C/K Series
The C/K series was introduced in 1960 and ran for 28 years. The twowheel drive trucks were identified as the C series, while four-wheel drive models were labeled the K series. A great many of these trucks, particularly the 1967 to 1972 models with their contemporary body design, remain on the road today.

The Silverado
The Silverado pickup replaced the long-running C/K series in late 1998 as the 1500 1/2-ton model, the 2500 3/4-ton truck and the 3500 1-ton offering. These popular trucks rivaled the Ford F-Series with a series of strong engines including the 4.3-liter Vortec V-6, the optional 4.8-liter and later the 5.3-liter V-8.

Super Sport
In the mid-1960s, Chevrolet began using its famed Super Sport package, or "SS" high-performance option, on its El Camino sports coupe utility pickup, which was based on the Chevelle body style. The Super Sport was later featured on the Silverado light-duty

pickups. The package includes a high-performance V-8 engine, racing suspension and exhaust, racing-style accents in the interior and special "SS" badging.

Hybrid
Chevrolet introduced a limited number of Silverado hybrids in 2005 but didn't start producing larger quantities until 2007. The hybrid was modest in its fuel-efficiency ambitions with an electric motor located in the transmission housing to start the engine and power the accessories. The motor also turns off the engine when the truck comes to a stop and restarts it when the brake pedal is released.

Avalanche
The Avalanche was introduced for the 2002 model year as Chevrolet's offering of a four-door passenger vehicle. Half sport-utility vehicle and half pickup truck, its rear window can be removed, and a folding back seat is hidden under a panel in the bed to carry additional passengers. Its heavy use of gray plastic cladding met with strong resistance from buyers, and a darker color was introduced in 2003.

Other Models
Taking low-cost cues from Japanese automakers, Chevrolet introduced the Chevy Luv in 1972, which competed against the Ford Courier and the Datsun and Toyota pickups in the "mini" truck market in the 1970s through the early 1980s. The compact and more popular S-10 pickups, modeled after the C/K series, and later the Silverado, continued the fuel-efficient truck line.

COMPETITORS
The major competitors for Chevrolet are: FORD PONTIAC TOYOTA FORD:
Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010. Chevrolet and Ford have been the two biggest competitors in NASCAR among auto manufacturers for years. Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce using elaborately engineered manufacturing sequences typified by moving assembly lines. Henry Ford's methods came to be known around the world as Fordism by 1914.

PONTIAC: The Pontiac brand was introduced by General Motors

in 1926 as the 'companion' marque to GM's Oakland Motor Car line. The Pontiac name was first used in 1906 by the Pontiac Spring & Wagon Works and linked to Chief Pontiac. Quickly overtaking its parent in popularity, it supplanted the Oakland brand entirely by 1933 and, for most of its life, became a companion make for Chevrolet.

TOYOTA: The history of Toyota started in 1933 with the

company being a division of Toyoda Automatic Loom Works devoted to the production of automobiles under the direction of the founder's son, Kiichiro Toyoda. Early vehicles bear a striking resemblance to the Dodge Power Wagon and Chevrolet, with some parts actually interchanging with their American originals.

Although the Toyota Group is best known today for its cars, it is still in the textile business and still makes automatic looms, which are now computerized, and electric sewing machines which are available worldwide.

FORECASTING
Forecasting can be broadly considered as a method or a technique for estimating many future aspects of a business or other operation. There are numerous techniques that can be used to accomplish the goal of forecasting. While the term "forecasting" may appear to be rather technical, planning for the future is a critical aspect of managing any organizationbusiness, nonprofit, or other. In fact, the long-term success of any organization is closely tied to how well the management of the organization is able to foresee its future and to develop appropriate strategies to deal with likely future scenarios. Intuition, good judgment, and an awareness of how well the economy is doing may give the manager of a business firm a rough idea (or "feeling") of what is likely to happen in the future. Nevertheless, it is not easy to convert a feeling about the future into a precise and useful number, such as next year's sales volume or the raw material cost per unit of output. Forecasting methods can help estimate many such future aspects of a business operation.

Forecasting methods:
All forecasting methods can be divided into two broad categories:

Qualitative Forecasting Method: Qualitative forecasting

techniques generally employ the judgment of experts in the appropriate field to generate forecasts. A key advantage of these procedures is that they can be applied in situations where historical data are simply not available. Moreover, even when historical data are available, significant changes in environmental conditions affecting the relevant time series may make the use of past data irrelevant and questionable in forecasting future values of the time series. Three important qualitative forecasting methods are: the Delphi technique, scenario writing, and the subject approach.

Quantitative

Quantitative forecasting methods are used when historical data on variables of interest are availablethese methods are based on an analysis of historical data concerning the time series of the specific variable of interest and possibly other related time series.

Forecasting

Method:

Methods for Quantitative Forecasting:

Trend projection Moving Average Exponential Smoothing Linear Regression

FORECASTING TOOL ADOPTED:

The method used for projecting sales and profit is the -

TREND PROJECTION METHOD.

Trend projection method is a classical method of business forecasting. This method is essentially concerned with the study of movement of variable through time. The use of this method requires a long and reliable time series data. The trend projection method is used under the assumption that the factors responsible for the past trends in variables to be projected (e.g. sales and demand) will continue to play their part in future in the same manner and to the same extend as they did in the past in determining the magnitude and direction of the variable.

Procedure to do time series analysis of a given data:

S SO bt
Now,
n n

S nS
1

b t
1 n

And

St So t b t 2
1 1 1

Solving these two equations, we can obtain the value of So and b. Substituting them, well obtain the equation of the trend projection line. Then we can obtain the projected value of the variable S by substituting the value of time period (t), for which the value has to be projected.

DATA AVAILABLE FOR CHEVROLET CARS

*profit in billion dollars *sales in million units

Period (t) 1 2 3 4 5 6 7 8 9 10

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Profit(s)* 0.60 1.74 3.82 2.70 -10.42 -1.98 -38.73 -31.05 105.00 6.50

Sales (s)* 8.073 8.411 8.098 9.098 9.05 9.18 9.29 8.14 6.50 8.39

FORECASTING SALES:
*sales in million units

Period (T) 1 2 3 4 5 6 7 8 9 10 T=55

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Sales (s)* 8.073 8.411 8.098 9.098 9.05 9.18 9.29 8.14 6.50 8.39 S=84.23

s*t 8.073 16.822 24.294 36.392 45.25 55.08 65.03 65.12 58.5 83.90

t^2 1 4 9 16 25 36 49 64 81 100

S*T=458.461 T^2=385

The Trend Equation is: Where

S SO bt

S O = [(S) (t^2) - (t) (S*t)] / d

b= [nS*t (t) (S)] / d

d=nt^2 (t) ^2 d= [(10*385)-(55^2)] Solving, d=825

Calculating S O : S O = [(84.23)*(385) (55)*(458.461)] / [(10*385) - (55^2)] Solving we get,

S O =8.743

Calculating b: b= [10*458.461 55*84.23] / 825 Solving we get, b= -0.0582 Hence the Trend Equation becomes: S=8.743+(- 0.0582)t Now, the sales for the next year i.e. 2011 (period 11) is calculated as: S11 = 8.743+ (-0.0582*11) = 8.1028 million units The sales have shown a downward trend as the slope is negative and the sales for 2011 are less than sales for 2010.

S = 0.85886041 r = 0.21274105

00 10.

Sales ( Million Units )

0 9. 0

0 8. 0

0 7. 0

00 6.2000.02001.02002.02003.02004.02005.02006.02007.02008.02009.02010.02011.0

Period ( Year )

FORECASTING PROFIT
*profit in billion dollars Period(t) Year 1 2 3 4 5 6 7 8 9 10 T=55 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Profit(s)* 0.60 1.74 3.82 2.70 -10.42 -1.98 -38.73 -31.05 105.00 6.50 S*t T^2 0.60 1 3.48 4 11.46 9 10.80 16 -52.10 25 -11.88 36 -271.11 49 -248.40 64 945.00 81 65.00 100

S=38.18 S*t=452.85 T^2=385

The Trend Equation is: Where

S SO bt

S O = [(S) (t^2) - (t) (S*t)] / d

b= [nS*t (t) (S)] / d

d=n (t^2) (t) ^2 d= [(10*385)-(55^2)] Solving, d=825

Calculating : S O = [(38.18)*(385) (55)*(452.85)] / [(10*385) - (55^2)] Solving we get, S O = -12.37 Calculating b: b= [10*452.85 55*38.18] / [(10*385) - (55^2)]
SO

Solving we get, b=2.943 Hence the Trend Equation becomes: S= -12.37+2.943t Now, the profit for the forthcoming year i.e. 2011 (period 11) is calculated as: S11 = -12.37+(2.943*11) =20.003 billion The profit has shown an upward trend i.e. in all periods taken into account. The Trend Equation predicts a profit of 20.003 in the 11th period which is more than the profit in the year 2010.

S = 40.01318532 r = 0.22992527

100

.00 00 00 00

Profit ( Billion Dollars )

80. 60. 40.

00 20. 0.0 -20 0

.00

.00 -40 .00 -60 2000.02001.02002.02003.02004.02005.02006.02007.02008.02009.02010.02011.0

Peroid ( Years )

MACROECONOMIC ISSUE: GREEK ECONOMY

Brief description of the Issue and the reason behind it:

Members of the European Union signed an agreement known as the Maastricht Treaty, under which they pledged to limit their deficit spending and debt levels. However, a number of European Union member states, including Greece and Italy, were able to circumvent these rules and mask their deficit and debt levels through the use of complex currency and credit derivatives structures. The structures were designed by prominent U.S. investment banks, who received substantial fees in return for their services and who took on little credit risk themselves thanks to special legal protections for derivatives counterparties. In the first weeks of 2010, there was renewed anxiety about excessive national debt. Some politicians, notably Angela Merkel, have sought to attribute some of the blame for the crisis to hedge funds and other speculators stating that "institutions bailed out with public funds are exploiting the budget crisis in Greece and elsewhere". Although some financial institutions clearly profited from the growing Greek government debt in the short run, there was a long lead up to the crisis. EU politicians in Brussels turned a blind eye and gave Greece a fairly clean bill of health, even as the reality of economics suggested the Euro was in danger. Investors assumed they were implicitly lending to a strong Berlin when they bought Eurobonds from weaker Athens. Historic enmity to Turkey led to high defence spending, and fuelled public deficits financed primarily by German and French banks.

The Effects and Unsuccessful methods which further degraded the economy: On 23 April 2010, the Greek government

requested that the EU/IMF bailout package (made of relatively highinterest loans) be activated. The IMF had said it was "prepared to move expeditiously on this request". The initial size of the loan package was 45 billion ($61 billion) and its first instalment covered 8.5 billion of Greek bonds that became due for repayment. On 27 April 2010, Standard & Poors slashed Greece's sovereign debt rating to BB+ or "junk status amid fears of default. The yield of the Greek two-year bond reached 15.3% in the secondary market. Standard & Poor's estimates that, in the event of default, investors would lose 3050% of their money. Stock markets worldwide and the Euro currency declined in response to this announcement. On 1 May, a series of austerity measures was proposed. The proposal helped persuade Germany, the last remaining holdout, to sign on to a larger, 110 billion euro EU/IMF loan package over three years for Greece (retaining a relatively high interest of 5% for the main part of the loans, provided by the EU). The November 2010 revisions of 2009 deficit and debt levels made accomplishment of the 2010 targets even harder, and indications signal a recession harsher than originally feared. Japan, Italy and Belgium's creditors are mainly domestic institutions, but Greece and Portugal have a higher percent of their debt in the hands of foreign creditors, which is seen by certain analysts as more difficult to sustain. Greece, Portugal, and Spain have a 'credibility problem', because they lack the ability to repay adequately due to their low growth rate, high deficit, less FDI, etc. On a poll published on 18 May 2011, 62% of the people questioned felt that the IMF memorandum that Greece signed in 2010 was a bad decision that hurt the country, while 80% had no faith in the Minister of Finance, Giorgos Papakonstantinou, to handle the crisis. Evangelos Venizelos replaced Mr. Papakonstantinou on 17 June. 75% of those polled gave a negative image of the IMF, and 65% feel it is hurting Greece's economy. 64% felt that the possibility of bankruptcy is likely, and when asked about their fears for the near future, polls

showed a fear of: unemployment (97%), poverty (93%) and the closure of businesses (92%). How This Problem Is Being Solved: On 13 June 2011, Standard

and Poor's downgraded Greece's sovereign debt rating to CCC, the lowest in the world, following the findings of a bilateral EU-IMF audit which called for further austerity measures. After the major political parties failed to reach consensus on the necessary measures to qualify for a further bailout package, and amidst riots and a general strike, Prime Minister George Papandreou proposed a re-shuffled cabinet, and asked for a vote of confidence in the parliament. The crisis sent ripples around the world, with major stock exchanges exhibiting losses. The meeting held on 5th November, 2011 had the following outcomes: Prime Minister George Papandreous cabinet won the Vote Of Confidence in the Parliament in spite of opposition from the leader of the opposition party New Democracy, Antonis Samaras, who suggested the cabinets resignation will be the best solution to the nations current crisis. But Papandreou suggested that a general election held at this point of time would be next to a disaster for Greece and a new coalition party should take charge until Greeces bail out deal is agreed upon by the EU. Papandreous ruling socialist party Pasok won the Vote Of Confidence and will be the ruling party until the general elections, to be held next year. Some experts argue the best option for Greece and the rest of the EU should be to engineer an orderly default on Greeces public debt which would allow Athens to withdraw simultaneously from the Eurozone and reintroduce its national currency the drachma at a debased rate. Economists who favour this approach to solve the Greek debt crisis typically argue that a delay in organising an orderly default would wind

up hurting EU lenders and neighbouring European countries even more. In the early hours of 27 October 2011, Eurozone leaders and the IMF came to an agreement with banks to accept a 50% write-off of (some part of) Greek debt, the equivalent of 100 billion. The aim of the haircut is to reduce Greece's debt to 120% of GDP by 2020. On 31 October 2011 Greek Prime Minister George Papandreou announced his government's intentions to put the acceptance of the terms under which the haircut is to take place up for a referendum, which is to happen as soon as the plans have been finalized in 2012.

History of government debt and deficit (1999present) Source: Eurostat, ELSTAT, MinFin 1999 2000 20011 2002 2003 2004 2005 2006 2007 2008 2009 Public debt, 122.3 141 151.9 159.2 168 183.2 195.4 224.2 239.3 263.1 299.5 billion Public debt, % of GDP 94 103.4 103.7 101.7 97.4 98.6 100 106.1 107.4 113.0 129.3 2010 329.4 2011 2012 (estimates) (forecasts) 354.7/356.5 371.9/384.9

144.9

161.8/162.8 172.7/181.4

GDP growth, 3.4 annual % Budget deficit, % of GDP

3.5

4.2

3.4

5.9

4.4

2.3

5.5

3.0

0.2 3.2 3.5/5.5 2.8/5.5

0.7/2.5

3.7 4.5 4.8 5.6 7.5 5.2 5.7 6.5 9.8 15.8
1

10.6

8.5/8.9

6.8/7

Year of entry into the Eurozone.

CONCLUSION
Sales and profit of CHEVROLET are predicted using Trend projection technique for next period i.e. for year 2011 taking into account data from year 2001 to 2010. As data showed continuous slope (rise) in profit and (fall) in sales, therefore trend projection method gave more accurate results. By directly applying methods of forecasting on a real life situation helped us to understand the concepts of Managerial economics in much more practical manner. The Greek economy issue is still in existence. It is one of the biggest issues as of now and it has put the euro in grave danger.

BIBLIOGRAPHY
BOOKS:
o H. Craig Petersen, W. Cris Lewis, o Managerial Economics, Pearson Education o Annual Report of GM Motors(year 2010,2007,2004)

INTERNET:
o www.wikipedia.org o www.google.com INTRANET: o JIIT Study Material