Develop the vector of initial state probabilities reflecting current market shares.
This will be entered as your starting values in time period 0 in the cells outlined in red
Develop two transition matrices — one for business as usual and one for the new policies
These will be entered in the transition matrix cells outlined in red
The formulas in cells B6:D20 will populate once you enter the inital states and transition probabilities.
And Answer the following Questions
1. What will the market shares be in one month if these changes are made? If no changes are made?
2. What will the market shares be in 3 months with the changes? Without the changes?
3. If market conditions remain the same, what market share would Rentall have in the long run? How does this compare with the market share that would result if the changes were not made? How many periods does it take to reach long-run equilibrium?
4. Generally, does it appear that the changes in business policy would be financially defensible given the market share results you have obtained?