these firms have seen income and pIU What threatens these full service brokerage

Question

these firms have seen income and pIU What threatens these full service brokerage firms? HU Relate this to our discussion in this chapter 5. Before deregulation in the late 1970s, airlines invested heavily in planes, even though the old airplanes were still very serviceabl ation, airlines are flying their airplanes much longer, and the average reduced their investment in new airplanes? (Hint: In the chapter w bout the effect of deregulation on the airlines.) n the early days of personal computing, software development w ndustry, in which individuals wrote program code in their home crosoft dominates the software industry. If you wanted to form a small ware development company by investing in a few computers a their fleet has lengthened considerably. Why do you think the airlines eof ta nd lea ice space, what entry barriers would you be facing now? Consides what difficulties you would have that Bill Gates and his contemporaries did some off ot have 25 years ago. Referring to Question 6, in spite of the dominance of Microsoft, small soft ware developers continue to thrive. What competitive strategy do you think these small developers have followed? 8. In the chapter, we suggested two competitive strategies for capitalizing on market opportunities: differentiation and cost leadership. We have provided some examples of each in the chapter. Consider an industry with which you are probably intimately familiar-fast food. Which fast-food companies ap- pear to follow each of these competitive strategies? 9. M any years ago, W.R. Grace was a steamship company operating passenger liners between the West Coast and Hawaii. Now it is a specialty chemical and energy products manufacturer. Why do you think W.R. Grace made such an abrupt change in its line of business? If you had been a shareholder of W.R. Grace, would you have welcomed the change? 10. What is the minimum rate of return that an investment should provide in or ? der to be acceptable to the company's investors? 11. Why do companys such as DuPont and Microsoft vigorously protect their atents and copyrights? should you rejoice or despair over this announcement? ture themselves. Quite often, this means divesting some lines of business 12. A company diversifies, in the words of the CEO, "to reduce our dependency n a single product and smooth our operating earnings." As a stockholder 13. There has been a trend for companies, such as Hewlett-Packard, to restruc- while keeping the core business. What prompts a company to undergo such restructur?n 14. Classify projects a-g by the following categories: Replacement project Expansion project Diversification project Dispersion project Mandated (by law) project a. A computer maker opens retail electso

Explanation / Answer

Answer 6: the software development industry has changed a lot since Bill Gates’ time. Any new venture in software development is expected to face much stiffer competition than it used to have in the earlier times. They are also likely to have much higher costs such as rents and salaries, which is also a function of competition for these scarce resources. Similarly, the software development funds are much better funded now, which have raised the bar for capital required to be invested in these firms. It is expected that current entrepreneurs are expected to plough in much higher amount of funds than entrepreneurs used to do in Bill Gates’ time.

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