...among existing firms, the lesser danger of potential entrants and higher barriers to entry, lesser substitutes for the firm’s products and a weaker bargaining power of the consumers and suppliers. Competitive incumbent firms or existing businesses in a particular market adopts strategic entry deterrence to discourage potential entrants from entering into competition in the market. These actions from the existing companies create and strengthen barriers to entry for the industry for new entrants. However, this course of action causes market to lose competition and some might even be illegal. Not all industries and not all companies respond in the same way, the strength and aggression of the response varies accordingly to the current market trends, conditions and consumer behaviour. In this essay, we will discuss on several strategic actions taken by the incumbent firms to create, maintain or increase deterrence on new and potential entrants and thereafter, analyzing the credibility of each action. There are many types of barriers to entry into a market, including factors like high capital costs, differentiated product, costs of switching, distribution network, economies of scale, suppliers, barriers to exit and legal and government created barriers. High capital cost: In an industry that demands a larger capital investment during the starting up process, it will act as a barrier to entry for most potential entrants unless those who have a competitively high initial capital...
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...[pic] Ecole Superieures Libre des Sciences Commerciales Appliquees Doctorate of Business Administration Human Capital Management Paper on Dynamic Capabilities of Firms Presented to: Dr. Sherif Delawar By Mohamed Antably March 2012 Cairo, Egypt. Abstract: From one hand the dynamic capabilities of firms are the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. Other hand, Human capital ultimate objectives are linking HR practices and knowledge with goals of the firm to achieve and develop Competitive advantages. Accordingly, linking both statements would generate that HC is not only working to achieve the organizations objectives and but also to formalize, maintain and develop the firm dynamic capabilities. HC should also work on sharing and collecting success stories, lessons learnt and implicit individuals' knowledge into institutional explicit knowledge. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining which is more difficult among horizontal levels but easy in the vertical levels applying the chain of command), shaped by the firm's asset positions (such as the firm's portfolio of difficult-to-trade knowledge assets and complementary assets), and the evolution path(s) it has adopted or inherited. The importance of path dependencies is ampled...
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...Psychological motivation of tax payers Tax compliance has been linked heavily with deterrence as the most important compliance-increasing factor but now a days importance of tax morale is being considered as intrinsic motivational toll for the honestly pay taxes. Tax morale , however, depends on the positive interaction of individual taxpayers and the taxing authority through fiscal exchange in a broader arena . Fiscal exchange, for example, may involve adequate provision of public services for the tax payers rather than purely monetary rewards which may be influenced by political decisions or by the way tax authorities treat tax payers in course assessment of the tax liability of an assessee. The relationship between the taxpayers and the taxing authority should be an as an implicit or “psychological tax contract”, under which the taxing authority must balance strategies of deterrence with those of responsive regulation. Tax compliance has many facets. The wealthy tax payers refrain from declaring their income physically earned in foreign countries mostly earned through non declaration or less declaration of commission on foreign trade and the wealth legally in foreign countries in the name of “second home” which is far from providing a comprehensive picture of their income and wealth as well. Tax non-compliance may also be generated through under reporting of income by relatively less wealthy tax payers when they work in shadow economy i.e. when they work in...
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...• Be competent in discussing the major concepts underpinning business level strategy and applying these in business case settings. • Be capable of applying a series of fundamental business strategy tools (including industry analysis, competitive strategy and resource and capability tools) and techniques to the formulation and analysis of value creation and capture at a strategic level. Porter 5 Force analysis Porter framework assumes: 1. industry structure drives competitive behaviour 2. Industry structure is (fairly) stable. [pic] Case: Airline Industry …. Porter’s 5 forces – purpose: Identifying the different stakeholders, or ‘forces’, which affect: • The level of competition in an industry. • The ability of a company to become powerful in that industry. Threat of New Entrants : • Company’s Point of view • Industry Point of view • Huge Capital Required • High Maintenance Cost • Brand Identity. • Govt. Policy Supplier’s Bargaining Power • Aircraft Manufacturers • Fuel Companies Buyer’s Bargaining Power • Travel Agents • Business Travelers Threat Of Substitute • Railway service • Bus service • Water Transport • Video conferences (for business flyers) Competitive Rivalry • Highly Competitive Industry. • Can work as growth driver for Industry. External Analysis: Porter’s Five Forces...
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...Defending a Domestic Position against Global Entries Abstract The paper offers a systematic review of strategic options available to incumbents coping with threats and attacks by a global firm. The framework makes it possible to review and analyze action alternatives based on the entry stage, the attack focus and defense tactics. Even though the globalization process has exposed domestic incumbents to greater threats, incumbents’ options have also increased. The doors of trade liberalization swing both ways. Opportunities for collaboration increase while anti-globalization movements and national patriotism can be mobilized for effective defense.. The framework presented in this paper builds on existing strategic theories and concepts in addition to published case studies. It offers a flexible and dynamic approach for reviewing alternative strategies for implementation and research. Key words: Defensive strategies, Incumbents, Global threats, Global opportunities, Globalization trends. Defending a Domestic Position against Global Entries Yaron Timmor; Samuel Rabino; Jehiel Zif Introduction In the age of globalization, many domestic firms are threatened by the entry of global firms (Baker and Ballington 2002; Beardsley et al. 2002; Roberts Nelson and Morrison 2005; Thoumrungroje and Tansubaj 2004). Equipped with mega brands, know-how and economies of scales, global and multinational firms shove aside and even trample local players (Douglast, Quelch and Taylor 2004;...
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...Entry and Exit Entrants threaten incumbents in two ways: First, they take market share away from incumbents. Second, entry often intensifies competition, leading to lower prices. This is a natural consequence of the Cournot and differentiated Bertrand models in which more firms imply lower prices. Some Facts about Entry and Exit There are three important implications for strategy: 1. When planning for the future, the managers must account for entry. 2. Managers should expect most new ventures to fail quickly. 3. Managers should know the entry and exit conditions of their industry. Entry and Exit Decisions: Basic Concepts The entrant must sink some capital that cannot be fully recovered upon exit – it is this element of risk that makes the entry decision difficult. The entrant hopes that postentry profits exceed the sunk entry costs. There are many potential sunk costs to enter the market such as specialized capital equipment to government licenses. The potential entrant may use many different types of information about incumbents, including pricing practices, costs and capacity to assess why postentry competition may be like. Barriers to Entry Structural entry barriers exists when the incumbent has natural cost of marketing advantages, or when the incumbent benefits from favorable regulations. Strategic entry barriers result when the incumbent takes aggressive actions to deter entry. Bain’s Typology of Entry Conditions * Blockaded...
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...need). 3. Industry Evolution a)2 mechanisms b) Founding rate c) Failure rate 4. AMC Model * Attacker i. Awareness: new market opportunity, market dependence ii. Motivation: past performance (bad=attack), likelihood of success iii. Capabilities: internal social capital + resources & competitors weaknesses * Defender i. Awareness: market dependence, attributes of attackers (direct comp?) ii. Motivation: past performance, impact of attack, likelihood of success iii. Weaknesses of attackers, resources & caps. *Motivation! Dynamic 2 firms 5. Strategic Groups a) Not all firms in industry are the same b) competition localized (products, size, location) c)Existence req. mobility barriers (entry, exit) grouping/diff to switch prd. Internal: Organizational Capabilities 6....
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...Name Professor Course Date The challenge that faces Telsa Motors trying to enter the Chinese market Organizational behavior is centered on how people act or behave in an organization. An organization is simply a group of individuals who have the same interests and are brought together by similar or common goals (Lam and John 123). Organizational behavior is, therefore, the study of the factors that influence how employees and other people respond, feel and act to organizations and work and how the Company is affected by the external environment (McShane, Steven and Glinow 321).Organizational behavior reveals how people interact in a group and how the environment affects this interaction. The subsidiary of Telsa Motors in China was registered in the year 2006, but full operations began in 2013 when the trademark issue for Telsa Motors was resolved. Organizations must learn that their trademark is an international recognized concept but in some overseas market there can be problems with the mark of a Corporation. The best way to overcome these matters can be through franchises with existing domestic Corporations. Telsa Motors, Inc. is an American multinational Company that manufactures designs and sells electric vehicles, components of power train and battery products. Telsa is a publicly traded Company that sells its stock on the NASDAQ stock exchange market under the symbol TSLA. Marc Tarpenning and Martin Eberhard started Tesla Motors way back in 2003 (Hettich and Stewens...
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...Kampala International University Abdifatah Adan Egeh Course work material +256718275925 caloolgeele@hotmail.com Introduction The analysis of barriers to entry and exit is fundamental to the assessment of market power and market efficiency. A firm or firms may exercise market power for a significant period of time only if barriers to new entry exist. Thus in determining whether or not a proposed merger is against the public interest, or whether a firm (or firms) is abusing monopoly or market power in antitrust cases, analysis of entry conditions is of primary importance. One might therefore expect to see rather extensive and sophisticated analyses of entry conditions, or barriers to entry, in monopoly and merger cases that come before competition authorities in the United States, United Kingdom, or member states of the European Union (EU). One might also expect that competition authorities would have placed a great deal of emphasis and effort on achieving a coherent and consistent framework for the analysis of entry barriers in a manner that makes use of the latest thinking on the subject by industrial organization economists. However, until very recently no competition authority that we are aware of has attempted to formulate a coherent and detailed framework for the analysis of barriers to entry, despite the significant degree of effort that has been put into clarifying the related problems of market definition and the measurement of monopoly or market power....
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...cost and strategic factors to explain why most companies in the US airline industry operate using a hub-spoke network. We postulate and estimate a dynamic oligopoly model where airline companies decide, every quarter, which routes (directional city-pairs) to operate, the type of product (direct flight vs. stop-flight), and the fare of each route-product. The model incorporates three factors which may contribute to the profitability of hub-spoke networks. First, consumers may value the scale of operation of an airline in the origin and destination airports (e.g., more convenient checking-in and landing facilities). Second, operating costs and entry costs may depend on the airline’s network because economies of density and scale. And third, a hub-spoke network may be an strategy to deter the entry of non hub-spoke carriers in some routes. We estimate our dynamic oligopoly model using panel data from the Airline Origin and Destination Survey with information on quantities, prices, and entry and exit decisions for every airline company over more than two thousand city-pair markets and several years. Demand and variable cost parameters are estimated using demand equations and Nash-Bertrand equilibrium conditions for prices. In a second step, we estimate fixed operating costs and sunk costs from the dynamic entry-exit game. Counterfactual experiments show that hub-size effects on entry costs is, by far, the most important factor to explain hub-spoke networks. Strategic entry deterrence is also...
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...Marketing, at the Stanford Business School. We thank Piet Vanden Abeele, Rajiv Lal, Mark Satterthwaite and Birger Wernerfelt for helpfiul discussions on earlier drafts. The Strategic Management Program at Stanford Business School provided financial support. / ~‘N ~ Abstract This article surveys the theoretical and empirical literature on mechanisms that confer advantages and disadvantages on first-mover firms. Major conceptual issues are addressed, and recommendations are given for future research. Managerial implications are also considered. INTRODUCTION What, exactly, are first-mover advantages? Under what conditions do they arise, and by what specific mechanisms? Do first-movers make aboveaverage profits? And when is it in a firm’s interest to pursue first-mover opportunities, as opposed to allowing rivals to make the pioneering investments? In this paper we examine these and other related questions. We categorize the mechanisms that confer advantages and disadvantages on first-mover firms, and critically assess the relevant theoretical and empirical literature. The recent burgeoning of theoretical work in industrial economics provides a rich set of models that help make our understanding of first-mover advantages more precise. There is also a growing body of empirical literature on order-of-entry effects. Our aim is to begin to provide a more detailed mapping of mechanisms and outcomes, to serve as a guide for future research. We define first-mover advantages in...
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...Marketing, at the Stanford Business School. We thank Piet Vanden Abeele, Rajiv Lal, Mark Satterthwaite and Birger Wernerfelt for helpfiul discussions on earlier drafts. The Strategic Management Program at Stanford Business School provided financial support. / ~‘N ~ Abstract This article surveys the theoretical and empirical literature on mechanisms that confer advantages and disadvantages on first-mover firms. Major conceptual issues are addressed, and recommendations are given for future research. Managerial implications are also considered. INTRODUCTION What, exactly, are first-mover advantages? Under what conditions do they arise, and by what specific mechanisms? Do first-movers make aboveaverage profits? And when is it in a firm’s interest to pursue first-mover opportunities, as opposed to allowing rivals to make the pioneering investments? In this paper we examine these and other related questions. We categorize the mechanisms that confer advantages and disadvantages on first-mover firms, and critically assess the relevant theoretical and empirical literature. The recent burgeoning of theoretical work in industrial economics provides a rich set of models that help make our understanding of first-mover advantages more precise. There is also a growing body of empirical literature on order-of-entry effects. Our aim is to begin to provide a more detailed mapping of mechanisms and outcomes, to serve as a guide for future research. We define first-mover advantages...
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...juice o Bottle water o Cola o Ready-to-eat breakfast cereal o Automobiles Two Issues • How is the # of products/brands/firms determined? Is it the correct #? • How do firms that produce differentiated products compete Monopolistic Competition • Chamberlain (1933) o Idea: Firms have same markets power but make zero profits o Face downward sloping demand curve o Free entry drives profits to zero o Representative consumer: views all brands as equally good substitutes for each other (symmetric) o With differentiated products implies preference for variety Undifferentiated Products • Cournot model w/ fixed costs and free entry • Entry implies zero profits • P = AC • # of firms determined by how many required to drive price down for AC • As fixed cost declines more firms enter and price approaches MC • Graphical Example, cost functions o Welfare: to get efficient outcome, need to subsidize one firm and force to charge MC o Tradeoff: more firms drive price down, but increases expenditure on fixed costs o Best thing you can do without subsidizing firms, is to restrict entry • Behavior of firms still to produce here MR= MC • Residual demand is more complicated • Algebraic examples • Equilibrium (cournot?) under monopolistic competition has two problems o Price not equal to MC o Number of brands (variety) is not optimal o Show: fixed costs lead to too little variety Suboptimal Product Variety • Graphical examples of Brand X and...
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...Consideration of Fraud in a Financial Statement Audit 1719 AU Section 316 Consideration of Fraud in a Financial Statement Audit (Supersedes SAS No. 82.) Source: SAS No. 99; SAS No. 113. Effective for audits of financial statements for periods beginning on or after December 15, 2002, unless otherwise indicated. Introduction and Overview .01 Section 110, Responsibilities and Functions of the Independent Auditor, paragraph .02, states, "The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether caused by error or fraud. [footnote omitted]"1 This section establishes standards and provides guidance to auditors in fulfilling that responsibility, as it relates to fraud, in an audit of financial statements conducted in accordance with generally accepted auditing standards (GAAS).2 .02 The following is an overview of the organization and content of this section: • • • Description and characteristics of fraud. This section describes fraud and its characteristics. (See paragraphs .05 through .12.) The importance of exercising professional skepticism. This section discusses the need for auditors to exercise professional skepticism when considering the possibility that a material misstatement due to fraud could be present. (See paragraph .13.) Discussion among engagement personnel regarding the risks of material misstatement due to fraud. This section requires...
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...A Sigma Medical Technologies Offering TABLE OF CONTENTS Executive Summary 3 Problem Statement 4 Introduction 6 Analysis of the Facts 8 Expeditionary Marketing Tools 19 Summary of the Facts 27 Alternatives 30 Recommendations 35 I. EXECUTIVE SUMMARY Founded in 2015, Sigma Medical Technologies (SIGMA) is located in the SE region of Albuquerque, New Mexico, in the Sandia Industrial Park area east of Kirtland Air Force Base on Eubank Blvd. SIGMA, owned by Dr. Remy and Mr. Bob Sachs (of TEAM Technologies), serves as the patent holder and developer of “Ozone”. UNM Anderson has been contracted to provide an expeditionary marketing study. Ozone offers an invasive, defined space; gas based delivery system (generated by the product) to kill all living organisms in a room. It provides an affordable elimination and sterilization system for use by the Medical industry. It provides an additional layer of security against concealed germs, bacteria, and viral threats (pathogens). It may even be the cost effective solution to deliver solution based field units to disease hot spots that are engineered for quick and easy “Ozone” sterilization. The technology offers a “whole room” elimination solution (fills available defined space and kills pathogens) as opposed to standard “surface” based elimination systems (based on chemical wipe down style cleaning). Dr. Remy and his supportive team have a...
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