{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Lecture 2 - Outline Defining a market Assessing opportunity...

Info icon This preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Outline Defining a market. Assessing opportunity in a market – Value Added – Porter’s Five Forces • Examples – Monster.com – Zipcar What is a Market? A “place” where a product or service is priced. Components of a market – The product itself – Substitute products – Buyers of the products – actual and potential – Sellers of the products – actual and potential Defining a Market: Some Examples Retail Gasoline vs. Diamonds Prescription drugs Food at North Campus Graduating UCLA BA’s in Econ
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Value Added - I Simple approach to analyzing the profit potential of a new business or product. Value Added = difference between demand and supply (costs) for the new product. Value Added represents the maximum profits you can earn in a undertaking. Demand P Q Costs Value Added Value Added - II Value Added - III Once you determine that there is significant value added of a new product, the question is how much of this value added you can capture as profits. Are competitors / substitutes / entrants / suppliers / demanders going to drive these profits to zero?
Image of page 2