they were asking “how does the firm add value for the buyers?” I picked they add value to buyers because the buyers were powerful, which means the buyers can squeeze every last drop of value out of the firm. The question specifically did NOT ask if the firm created value for shareholders!
milkpump Wrote: ------------------------------------------------------- > they were asking “how does the firm add value for > the buyers?” I picked they add value to buyers > because the buyers were powerful, which means the > buyers can squeeze every last drop of value out of > the firm. The question specifically did NOT ask > if the firm created value for shareholders! They should be the same. If they add value for the buyers they will be willing to pay for it, which will in turn benefit the shareholders.
whatever it is, I picked rival as the one as other choices are obviously not right.
whatever it is, I picked entry barrier as the one as other choices are obviously not right.
milkpump Wrote: ------------------------------------------------------- > they were asking “how does the firm add value for > the buyers?” I picked they add value to buyers > because the buyers were powerful, which means the > buyers can squeeze every last drop of value out of > the firm. The question specifically did NOT ask > if the firm created value for shareholders! It was asking from the firm’s perspective. 100% sure of that. Firm’s don’t add value for buyers.
I put barriers to entry, cyclical and loss of differentiation parity
guys, it said it RIGHT on the vignette that it was barriers to entry. there was nothing really to think about. it was a gift question
same.
agreed, the buyers had bargaining power, the suppliers had bargaining power…the only one left was rivalry
Slash Wrote: ------------------------------------------------------- > guys, it said it RIGHT on the vignette that it was > barriers to entry. there was nothing really to > think about. it was a gift question That is what I put, but that is also what makes me think it was wrong.
mwvt9 Wrote: ------------------------------------------------------- > That is what I put, but that is also what makes me > think it was wrong. don’t worry. basically the vignette said that the industry required high amounts of capital investment, the suppliers have high bargaining power, rivalry is high, and buyers have high bargaining power. it was said in about 1-2 sentence. the key point of barriers to entry is that new entrants may compete away the value added component of price. high barriers to entry is ideal for firms already in the industry.
i went with barrier very uncomfortably because the 3rd paragraph stated it is not B) C) and D) but didnt say it is not A) barrier, so went with that… not sure why tho
what were the other questions in this vignette? i forget
ruckmani Wrote: ------------------------------------------------------- > I put barriers to entry, cyclical and loss of > differentiation parity Ditto. Hope you’re right 
I missed Barriers, I think I put suppliers for some ridiculous reason, oh well agree with cyclical and differentiation parity.
was it cyclic? I put in Growth there…
Cyclical, they said that their main risk is that recession causes all kinds of problems etc.
yeah, barriers, cyclical, diff prox. 2/3 for me
Good to hear that it was barriers of entry…I almost thought that it was wrong because it had been spelt out in the vignette…that qn. was kinda confusing though.
Can’t remember the exact Q but on the same topic there was something about what would cause profits to drop, or a threat to profitability - I chose barriers to exit as the answer since firms are trapped in the industry.