Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 14: Problem 3

Briefly explain which of the five competitive forces is involved in each of these business developments. a. The effect on Apple as Microsoft introduces the Surface Laptop computer b. The effect on McDonald's as White Castle and Taco Bell start selling breakfast food c. The effect on Target retail stores when Harry's razors cuts into Gillette's share of the razor market d. The effect on the publishing firm Hachette when Amazon bargains to lower the prices of the books Hachette sells on Amazon's site e. The effect on the AMC movie theater chain of IMAX increasing the fees it charges to theaters to use its technology

Short Answer

Expert verified
a. Threat of new entrants (Microsoft with new product). b. Threat of substitute products/services (White Castle/Taco Bell with breakfast menu). c. Bargaining power of suppliers (Harry's razors affecting Gillette's market share). d. Bargaining power of buyers (Amazon negotiating lower prices with Hachette). e. Bargaining Power of Suppliers (IMAX increasing its technology use fees for theaters).

Step by step solution

01

Evaluate the Case of Apple and Microsoft

The situation here represents 'Threat of new entrants'. Microsoft, a new entrant, introduces a product (Surface Laptop) directly in competition with Apple's products.
02

Evaluate the Case of McDonald’s, White Castle, and Taco Bell

With White Castle and Taco Bell beginning to serve breakfast, they become new competitors for McDonald's in the breakfast food market. This represents 'Threat of substitute products or services'.
03

Evaluate the Case of Target Stores, Harry's Razors, and Gillette

Here the situation revolves around the 'Bargaining power of suppliers'. If a supplier (Harry's razors) manages to significantly reduce Gillette's market share, it could impact the costs, delivery and availability of products for Target.
04

Evaluate the Case of Hachette and Amazon

This scenario is an example of the 'Bargaining power of buyers'. Amazon, one of Hachette's most significant buyers, is using its purchasing power to negotiate lower prices.
05

Evaluate the Case of AMC Movie Theater and IMAX

Here, the situation is about 'Bargaining Power of Suppliers'. IMAX, being a supplier, is increasing its fees, which would affect AMC's expenses.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Bob and Tom are two criminals who have been arrested for burglary. The police put Bob and Tom in separate cells. They offer to let Bob go free if he confesses to the crime and testifies against Tom. Bob also is told that he will serve a 15 -year prison sentence if he remains silent while Tom confesses. If Bob confesses and Tom also confesses, they will each serve a 10-year sentence. Separately, the police make the same offer to Tom. Assume that Bob and Tom know that if they both remain silent, the police have only enough evidence to convict them of a lesser crime, and they will both serve 3 -year sentences. a. Use the information provided to write a payoff matrix for Bob and Tom. b. Does Bob have a dominant strategy? If so, what is it? c. Does Tom have a dominant strategy? If so, what is it? d. What prison sentences do Bob and Tom serve? How might they have avoided this outcome?

Alfred Chandler, who was a professor at the Harvard Business School, once observed, "Imagine the diseconomies of scale- the great increase in unit costs- that would result from placing close to one-fourth of the world's production of shoes, or textiles, or lumber into three factories or mills!" The shoe, textile, and lumber industries are very competitive, with many firms producing each of these products. Briefly explain how Chandler's observation helps explain why these industries are competitive.

An economist argues that with respect to advertising in some industries, "gains to advertising firms are matched by losses to competitors" in the industry. Briefly explain the economist's reasoning. If his reasoning is correct, why do firms in these industries advertise?

World War I began in August 1914 and on the Western Front quickly bogged down into trench warfare. In Belgium and northern France, British and French troops were dug into trenches facing German troops a few hundred yards away. The troops continued firing back and forth until a remarkable event occurred, which historians have labeled "The Christmas Truce." On Christmas Eve, along several sectors of the front, British and German troops stopped firing and eventually came out into the area between the trenches to sing Christmas carols and exchange small gifts. The truce lasted until Christmas night in most areas of the front, although it continued until New Year's Day in a few areas. Most of the troops" commanding officers were unhappy with the truce- they would have preferred the troops to keep fighting through Christmas - and in the future they often used a policy of rotating troops around the front so that the same British and German troops did not face each other for more than relatively brief periods. Can game theory explain why the Christmas Truce occurred? Can game theory help explain why the commanding officers' strategy was successful in reducing future unauthorized truces?

(Related to the Don't Let This Happen to You on page 486 ) A student argues, "The prisoner's dilemma game is unrealistic. Each player's strategy is based on the assumption that the other player won't cooperate. But if each player assumes that the other player will cooperate, the 'dilemma' disappears." Briefly explain whether you agree with this argument.
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free