(3) Ice Fili

(3) Ice Fili - Ice-Fili Business Policy (MGBU 4441) Prof....

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1 Ice-Fili Business Policy (MGBU 4441) Prof. Benjamin Cole “NUMBERS” Fragmented Oligopoly Duopoly Monopoly “Price Setter” (up to WTP) Gets whole pie Adding a firm splits the pie Tacit (rather than Explicit) Collusion is possible For every new entrant, monitoring & coordination become more difficult (e.g., Who in OPEC is “cheating”?) Pure “Price Takers” Tiny slivers of pie for everyone Market Share
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2 The Profit Tree Up Willingness to Pay (WTP) Grab Mkt Shr Grow Market Up Efficiency Cut Input Costs Profits Revenues Costs Quantity Price Variable Costs Fixed Costs How to Increase Profits Porter’s Five Forces Buyer Power Barriers to Entry Supplier Power Industry Rivalry Substitutes CAN FORCE YOU TO LOWER PRICE (P ↓) MAY BUY BULK (Q↑) • Walmart forcing Kellogg’s to sell at certain price FIRM CAN INCREASE YOUR COSTS (C ↑) • DeBeers selling diamonds to Tiffany’s CAN SHRINK SIZE OF TOTAL PIE YOU GET (Q ↓)
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(3) Ice Fili - Ice-Fili Business Policy (MGBU 4441) Prof....

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