Can you please give me short 5 intelligent questions about this topic to ask to
ID: 1116494 • Letter: C
Question
Can you please give me short 5 intelligent questions about this topic to ask to the presenter?
WHAT MAKES A COMPANY PROFITABLE
Competitive Advantage: Is the attribute that allows an
organization to outperform its competitors. A competitive
advantage may include access to natural resources, highly
skilled labor, geographic location, high entry barriers, and/or
access to new technology.
Pricing: Method adopted by a firm to set its selling price. It
usually depends on the firm's average costs, and on the
customer's perceived value of the product in comparison to the
firm’s perceived value of the competing products.
Sales: If sales numbers are high, a company is better prepared
to handle adverse market conditions and economic
downtrends
COMPETITION AND MARKET POWER
A company's profitability doesn’t matter how large or small the company
is or how well it is being run, many firms that are larger or better
managed have very low profits, and many smaller and more poorly ran
companies have higher profits.
The profitability of a company depends more on whether it can easily
enter the market and continue to compete within that market. For
companies that enter the market freely, it can result in lower economic
profits, while companies that have a more difficult entry to the market
usually result in better and higher economic profits.
Economic profits are the difference between a company's revenue and
opportunity cost. A company is not required to earn any kind of
economic profits in order to stay afloat, because that company would
still be covering all of its opportunity costs without using any of its
resources.
Economic profits, serve as incentives to enter different markets for
individuals or entrepreneurs who are looking to make money; thus,
keeping the business alive.
However, as new companies enter the market, it forces the companies that
already exist in the market to lower their prices and often decreases their
number of customers and clients. This results in the entire market to lose
profits, until eventually the process of companies entering the market
completely halts. Resulting in entrepreneurs who were once searching for
money making opportunities, will now not give the market a chance
because of the unprofitability.
ECONOMIES OF SCALE AND RAW MATERIALS
In many scenarios larger companies can afford to produce
products and charge lower prices than that of smaller
companies.
This is because larger companies buy or control all the raw
materials needed in order to produce the product. The
materials that the larger companies buy have quantity
discounts; so therefore, they can charge lower prices.
This also denies many smaller companies from gaining entry
to certain markets because of their lack of controlling any
materials.
DIFFERENT MARKET STRUCTURE
Competitive: Most markets have very few or no barriers to entry at all,
and it is relatively cheap to enter these markets, so this allows many
different companies to enter the market, whether they are small or large.
This in return makes these type of markets very competitive and absent of
market power. (Ex: The Fast Food Industry)
Oligopoly: These markets have stricter barriers and higher fees, which
causes very few competitors and much larger companies. These companies
are the ones with control on raw materials and high budgets. (Ex: The
Automobile Industry)
Monopoly: These markets have only one competitor, that contrls the
complete market with all of its materials and resources. These markets are
highly illegal. (Ex: The Early Gas & Electric Industries)
ADVANTAGES OF LARGE COMPANIES
Advantages:
Branding & History
More Opportunities for Advancement
Higher Economic Scale
Employment Stability
Set Policies & Guidelines
Specialization of Job Roles
Diversified Revenue Streams
More Employees
DISADVANTAGES OF LARGE COMPANIES
Advantages:
Branding & History
More Opportunities for Advancement
Higher Economic Scale
Employment Stability
Set Policies & Guidelines
Specialization of Job Roles
Diversified Revenue Streams
More Employees
ADVANTAGES OF SMALL COMPANIES
Advantages:
Lower Overhead
Flexibility
More Relaxed
Competition on Prices
Consumer Relationships
Ever Changing
Community Support
More Creative
DISADVANTAGES OF SMALL COMPANIES
Disadvantages:
More Responsibility
Higher Risk
Smaller Budgets
Buying Advertising Power
Higher Cost
Vulnerability
Less Employees
Explanation / Answer
A natural resource is available to all companies. So how can natural resources be a source of competitive advantage to a specific company? How can a company make technology a source of sustainable competitive advantage? What is the available strategy for a small firm trying to enter an industry in which few large firms have achieved economies of scale? High risk is a disadvantage for small companies. How can small companies manage risk? How can large firms ensure continuous innovation and learning to stay competitive?