Studying for L2 makes me feel like Stuck-in-the middle

… To attribute my life to this crappy patriotic question. Stuck-in-the middle firms: A) compete on par with those that have achieved either product differentiation or cost leadership. B) can be above average performers given a favorable structure of the industry. C) will always be below average performers. D) ultimately exit the industry because they cannot compete effectively.

d is the closest I can guess. these firms try to achieve either Cost leadership or product diff

I’m going with C. Stuck in the middle firms can never do as well as firms that achieve product differentiation OR cost leadership. The best they can hope for is mediocrity. I’m stuck in the middle for now but going for a cost leadership strategy for the exam. IE have a vague understanding of most subjects and not particularly good in any specific one.

My feeling is that if a firm is stuck in the middle and can’t compete, then ultimately they exit the industry. How many firms can stay mediocre and exist in the long run? D You at starbucks tonight Dinesh?

I’m stuck in the middle of C and D. I mean, if a firm is a perpetual underperformer, wouldn’t it necessarily have to exist the industry because they can’t compete?

No, if the industry has favorable conditions, a firm can continue to profit even if they are stuck in the middle. The notes made a specific mention of this. Thus D is not necessarily true.

jalmy8 Wrote: ------------------------------------------------------- > You at starbucks tonight Dinesh? Hey jalmy8, I was at home since noon, but going out now [for some fresh air] - away from studies. Will probably be back for tonights rollcall.

I think I remember reading something about B.

roger that… lesson learned. Thanks Dwight

You bet, although Dinesh will have to verify as I am working off of memory. Would give myself 95% certainty though.

Good batte batle between C and D guys. Keep it going.

i’ll get crazy and go with B. i want to say if you’re stuck in the middle you can get out of your rut so C and D i don’t love.

gotta be c. clowns to the left of me, jokers to the right, here i am, stuck in the middle with you.

I like B as well. Anytime something is mentioned with absolution I tend to get nervous.

BRILLIANT bannisja - CORRECT ANSWER IS B. I would have never though of this… Your answer: C was incorrect. The correct answer was B) can be above average performers given a favorable structure of the industry. In spite of being stuck in the middle, if the industry structure is favorable, such firms can earn higher than average returns. However, this may not be sustainable over the long term if consumer tastes change over time.

“i’ll get crazy and go with B. i want to say if you’re stuck in the middle you can get out of your rut so C and D i don’t love.” Ouch good point. But then you wouldn’t be “stuck-in-the middle” anymore, you would be one of the other 2 categories. I can see how B would work, because if you are in a booming industry where no one has really achieved cost leadership or product differentiation, you could still achieve above normal profits. I like C better whatever the answer turns out to be =P

wow banny - you’re on a roll tonight.

Wow… that was intense.

i dare you to post a real swaps question. i’ll go from hero to zero in about… i dunno… 22 minutes of scribbled calculations that get me nowhere.

stuck in the middle series continues… A firm can pursue cost leadership and differentiation strategies simultaneously when: A) the firm’s costs are strongly affected by market share or it pioneers a major innovation. B) the firm is stuck in the middle and the condition is long term. C) there are no economies of scale and the firm is operating in the rising portion of its total average cost curve. D) the firm has a very strong management team with a great deal of experience.