COMM 305 Midterm: theories midterm.docx
Document Summary
Major claim: successful firms are the ones that first capitalize on economies of scale and scope, create management structures and invest in research and development which allows them to stay ahead of the competition. Second claims: unrelated diversification leads to problems in the long run. Business ownership patterns have diminished the likelihood of many firms" long term success. Claims: important to invest, be committed/ companies still ignore logic/ pursuing a wide mkt is key/ hard to enter a mkt when there"s already a 1st mover/ company succeed when it dvlps an economy of scale and scope. Economies of scale: doing things on a greater scale makes things cheaper. Economies of scope: being able to make other things based on the knowledge and materials you have. First movers: first to hire managers, to grow, move. Once a firm loses the opportunity to be a first mover, it is difficult to regain competitive advantage. Research and development: new technologies, improving quality, price/cost.
