Suppose that you own a 25 year old movie theater in Micropolis. It has 6 screens

Question

Suppose that you own a 25 year old movie theater in Micropolis. It has 6 screens and a concession stand. Across town there is a 7 year old movie theater with 4 IMAX screens and 20 more regular screens. Your competitor’s movie theater also has stadium seating for all screens and two concessions stands. Remember this is a small to mid-sized city with a small to moderate sized customer base.

For each of the characteristics listed below, evaluate the market for movies in Micropolis.You should clearly state your answer and provide a short statement to support your answer.

A. Number of firms

B. Product

C. Barriers to entry

Explanation / Answer

A. No. of firms :

It is clear from the Given information that there are just two firms operating in the market, once is yours and one is your competitor.

B. Product:

Clearly the product is simply not the movie screens rather the entertainment service you are providing i.e. Movie and Cinema.

C. Barriers to entry:

Barriers to entry simply means anything any information that has been supplied in the case study which you think is not allowing 3rd firm to enter the market. Well with given information i can think of one most important barrier is, there are two firms already operating, one is having a brand value since it is 25 years old, and other is operating on a large scale. So a new firm might not even think to enter looking at the current competitors in the market.

Well, the target customers in the market. The size of the city is not very big, and there are already two firms operating there, what does it mean? What if city was very large, then some of the entreprenuer might think of coming into the market, but size of the city also act as a barrier to entry.

I hope you understood the whole concept. Please free to comment if you still have any doubts. Please rate the answer provided based on how much understanding you got.

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