ADM 4311 Lecture Notes - Lecture 3: Frigidaire, Costco, Experience Curve Effects
5 Apr 2019
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> the "rules of the game" are changing (e. g, uber - legal can be viewed as a self- defence mechanism for taxi companies) > unfavourable climate: reduce production to o set losses. Two approaches: control external factors to prevent changes from occurring (monopoly, government, etc. , anticipate change and remain exible. > the threat that new companies enter the market. > counter this threat by establishing barriers to entry: > the e ect of the experience curve: the price tends to decrease with time (laptop) > product di erentiation and brand loyalty: coca-cola, frigidaire, apple. > supply and distribution: exclusive supplier to walmart, costco. > government regulation: television and broadcasting, alcohol sales, energy services. > buyers with strong bargaining power can drive down prices. > characteristics of buyers with great power: the products sold are identical, buyers buy in large quantities, seller change is inexpensive, the buyer can manufacture the product itself.
