BUS 498
Challenge questions
1. Government
policies can have a significant impact on the average profitability of firms in
an industry. Government, however, is not included as a potential threat in the
five forces model. Should the model be expanded to include government (to make
a “six forces” model)? Why or why not? Use IO economic (e.g., Porter) concepts
and logic.
2. Will a
firm currently experiencing disadvantage be able to gain an advantage by
studying another firm that is experiencing advantage? Why or why not?
3. Which
firm will have a higher level of economic performance: (a) a firm with
valuable, rare, and costly?to?imitate capabilities competing in a very
attractive industry or (b) a firm with valuable, rare, and costly?to?imitate
capabilities competing in a very unattractive industry?
4. Firms
engage in an activity called “forward pricing” when they establish, during the
early stages of the learning curve, a price for their product that is lower
than their actual costs, in anticipation of lower costs later on, after significant
learning has occurred. Under what conditions, if any, does forward pricing make
sense?
5. Product
features are often the focus of differentiation (i.e., business strategy)
efforts. Yet product features are among the easiest?to?imitate bases of differentiation
and thus among the least likely bases of differentiation to be a source of
advantage. Does this seem paradoxical? Explain.
Note:
x Italicized
questions must be completed sequentially. For example, Q1 must be completed
before Q2. In order words and for example, Q1 must be completed before comments
are provided for Q2.
x Comments
for Q4 and Q5 will be provided once Q1, Q2, and Q3 are completed. See ordering.
o {Q1}
o {Q2}
o {Q3}
o {Q4, Q5}
? Answers, on average, are one?half page – singled spaced.
In short, answers are not one or two sentences. Of course, a figure is worth a
thousand words.
? “Searching the web”
for an “answer” is not useful.
1
