Essay about Competitive Advantages Of Learning By Doing

2139 Words Nov 11th, 2016 9 Pages
Question 1
True. Company A has three competitive advantages: learning-by-doing, which requires a competitor to be in the industry to develop the expertise necessary to compete; highly-differentiated products, which makes the products difficult to replicate and creates a price premium with customers; and, input commodities, which suggests the firm will not uniquely experience price-pressure from its suppliers.
Company B competes in an industry where new entrants can easily enter the market, products are easily replicated by competitors, and suppliers are likely to exhibit significant pricing power.
All of these factors contribute to making the industry within which Company A operates more profitable than the industry within which Company B operates, and therefore more likely that Company A is more profitable than Company B.

Question 2
Depends. While the university may initially have something of a technological advantage due to its scale and the size of its endowment, which allow for the purchase of such cutting-edge technology, over time the price of the equipment will decrease and other universities will be able to purchase the equipment, moving more supply onto the market and driving down the price for services.
Further, since most medical expenses are not paid out-of-pocket, but rather through a third-party insurance provider, there is the chance that insurance companies may deem this new technology too expensive and require patients to use standard radiation…

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