Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Chapter 13, Problem 17PAA
To determine
To explain: Whether there is a business rationale for the given strategy.
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Back in the 1950s, General Motors (GM) was at its peak. It was widely viewed as a shining example of how a large company should be managed, and controlled three quarters of the US car market.As at 2020, GM remains the biggest automaker by sales in the US, but it controls less than 20% of the market. For consumers, this level of competition has been wonderful; the level of choice when it comes to buying and leasing. For GM, as well as other large carmakers, having to operate in this realm isn't always fun, but if pressed they'll admit that there's something distinctly American about the market being hyper-competitive — and they might even acknowledge that having Germans and Japanese brands to do battle against helps them to improve their own capabilities.
a. Are the firms in the automobile industry operating efficiently in (i) the 1950s and (ii) presently? Explain.
Back in the 1950s, General Motors (GM) was at its peak. It was widely viewed as a shining example of how a large company should be managed, and controlled three quarters of the US car market.As at 2020, GM remains the biggest automaker by sales in the US, but it controls less than 20% of the market. For consumers, this level of competition has been wonderful; the level of choice when it comes to buying and leasing. For GM, as well as other large carmakers, having to operate in this realm isn't always fun, but if pressed they'll admit that there's something distinctly American about the market being hyper-competitive and they might even acknowledge that having Germans and Japanese brands to do battle against helps them to improve their own capabilities.
State what market structure existed in the automobileindustry in the US in the 1950s. Illustrate and explain how equilibrium is determined.
Can excess profit be earned in this industry in the long run. Explain.
State what market…
Back in the 1950s, General Motors (GM) was at its peak. It was widely viewed as a shining example of how a large company should be managed, and controlled three quarters of the US car market.As at 2020, GM remains the biggest automaker by sales in the US, but it controls less than 20% of the market. For consumers, this level of competition has been wonderful; the level of choice when it comes to buying and leasing. For GM, as well as other large carmakers, having to operate in this realm isn't always fun, but if pressed they'll admit that there's something distinctly American about the market being hyper-competitive — and they might even acknowledge that having Germans and Japanese brands to do battle against helps them to improve their own capabilities.
Are the firms in the automobile industry operating efficiently in (i) the 1950s and (ii) presently? Explain.
What role, if any, does advertising play in the automobile industry in the (i) 1950s and (ii) presently? Explain.
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Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
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- Back in the 1950s, General Motors (GM) was at its peak. It was widely viewed as a shining example of how a large company should be managed, and controlled three quarters of the US car market.As at 2020, GM remains the biggest automaker by sales in the US, but it controls less than 20% of the market. For consumers, this level of competition has been wonderful; the level of choice when it comes to buying and leasing. For GM, as well as other large carmakers, having to operate in this realm isn't always fun, but if pressed they'll admit that there's something distinctly American about the market being hyper-competitive and they might even acknowledge that having Germans and Japanese brands to do battle against helps them to improve their own capabilities. State what market structure existed in the automobileindustry in the US in the 1950s. Illustrate how equilibrium is determined.arrow_forwardBack in the 1950s, General Motors (GM) was at its peak. It was widely viewed as a shining example of how a large company should be managed, and controlled three quarters of the US car market. As at 2020, GM remains the biggest automaker by sales in the US, but it controls less than 20% of the market. For consumers, this level of competition has been wonderful; the level of choice when it comes to buying and leasing. For GM, as well as other large carmakers, having to operate in this realm isn't always fun, but if pressed they'll admit that there's something distinctly American about the market being hyper-competitive — and they might even acknowledge that having Germans and Japanese brands to do battle against helps them to improve their own capabilities. State what market structure existed in the automobile industry in the US in the 1950s. Illustrate and explain how equilibrium is determined. Can excess profit be earned in this industry in the long run. Explain.arrow_forwardBack in the 1950s, General Motors (GM) was at its peak. It was widely viewed as a shining example of how a large company should be managed, and controlled three quarters of the US car market. As of 2020, GM remains the biggest automaker by sales in the US, but it controls less than 20% of the market. For consumers, this level of competition has been wonderful; the level of choice when it comes to buying and leasing. For GM, as well as other large carmakers, having to operate in this realm isn't always fun, but if pressed they'll admit that there's something distinctly American about the market being hyper-competitive — and they might even acknowledge that having Germans and Japanese brands to do battle against helps them to improve their own capabilities. State what market structure existed in the automobile industry in the US in the 1950s. Illustrate and explain how equilibrium is determined.arrow_forward
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