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Last summer the Wall Street Journal reported the declining market positions held by some of Japan’s earliest innovators in the consumer electronics industry

Last
summer the Wall Street Journal reported the declining market positions held by
some of Japan’s earliest innovators in the consumer electronics industry,
including Sharp and Sony Although these firms introduced the first low-cost
electronic radios, stereos, and televisions, dominating the industry for
several years, they are now experiencing declining market shares due to faster
innovations and lower prices offered by electronics manufacturers in other
countries What are the advantages and disadvantages of being the first entrant
into a new industry? What tools or strategies can these firms use to protect
their early lead in the business?

 

2) Panera
Bread has many cafes located across the US and Canada The chain was originally
founded in St Louis, MO A few years ago the parent firm (St Louis Bread
Company) tried an experiment in one of their first stores in St Louis – they
removed the prices from the posted menus and allowed customers to pay whatever
they felt was fair for food and beverages Although we might expect some
customers to take advantage of the policy and pay little or nothing, St Louis
Bread reported that the annual sales revenue for this store actually increased
during the experiment Some analysts explained this outcome by arguing that
consumers were behaving in less than rational ways (eg, they consistently
over – estimated the prices or they over-paid due to altruism) In contrast,
how could we use the concepts to explain the observed sales revenue as an
outcome of rational economic behavior?

 

3) Suppose
your firm manufacturers vitamins and other specialty chemicals for the food
processing industry You have little competition and there are few close
substitutes for your products, so you are able to set your price above the
marginal cost of production Last week, your corporate attorney learned that
the US Department of Justice is investigating your market for potential antitrust
violations, and they have requested your past pricing and cost information in
order to estimate the Lerner index (markup on price) for some of your major
products While preparing the response to the federal authorities, your
attorney asks you the following question – can external changes in the market
situation that are beyond your control cause your Lerner index (markup) to
increase? Please provide a detailed explanation

 

4) You take
a new job as the assistant to the regional manager of a small office supply
firm in the Northeast US During your first day on the job, the regional
manager explains that they use a quantity discount program to set prices for
the firm’s main product, paper for photocopiers and office printers Under the
current discount program, smaller firms pay lower prices because the regional
manager wants to attract small business customers away from the big-box office
supply firms, which use more conventional quantity discounts (they charge
higher prices for small quantities and offer discounts for large volumes) Is
the manager likely to succeed in capturing the small-business segment of the
office paper market under the current discount program? Is this pricing policy
likely to generate higher profits for your firm than a more conventional
quantity discount program? Please explain your response

Mar 17 2020 View more View Less

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