Case/Firm Strategy Analysis Project Description & Requirements • Formulating a research strategy: what is required, what are the sources, how are they accessed and how should our team proceed to gather the information? • Locating and using library sources of information: directories, CD-ROM and other databases (e.g., Lexis-Nexis, ABI/Inform), periodical indices, and industry surveys and outlooks published by a variety of organizations and current business periodicals (e.g., Wall Street Journal, Business Week, Fortune) must be used to provide depth to phase two of the project. • Using and locating non-library sources of information: the Internet/www can be used to access the home pages of commercial firms, government agencies (such as the Department of Commerce or the Securities & Exchange Commission), trade associations and brokerage firm reports for phase two of the project. • Organizing what appears to be unrelated data/information into a logical format and communicating it in a logical written form or style. To satisfy the major research requirement of this course, each team will prepare, submit and present a set of recommended strategic actions to be taken by the firm that is the focus of their assigned case. The Case/Firm Strategy Project is to be completed in two parts that will be included in a single written report--following the requirements provided--and an oral presentation. For additional guidance as to format, refer to the Guidelines for Written Analyses in the course syllabus and information provided in this document and on BlackBoard. The completed combined analysis and update report (including PowerPoint slides used in the presentation) must be submitted by the date noted in the Course Outline/Schedule. Include a Table of Contents with the name of the team member responsible for completing each major sub-section. • Part one of the project requires that students perform a 1brief analysis of information provided in the assigned case to provide background related to the firm’s external and competitive environments. This enables the team to [1] identify any external opportunities and threats facing the firm, [2] describe the firm’s competitors and their approaches to competing and [3] identify key success factors (KSFs) for the industry. The next section of the part one analysis requires that a firm analysis be performed to [1] identify the firm’s strengths and weaknesses (the value of the firm’s resources, capabilities and competencies) relative to its competitors and key success factors and [2] identify immediate problems or opportunities facing the firm as well as decisions to be made as identified in the case. Using the external and internal and external analyses as background, the team then will develop alternatives and make strategy-related recommendations. This requires that the team [1] identify alternatives available to the firm that will enable it to solve its problems, take advantage of opportunities and o ...

1. Case/Firm Strategy Analysis Project Description &
Requirements
•
Formulating a research strategy: what is required, what are the
sources, how are they accessed and how should our team
proceed to gather the information?
•
Locating and using library sources of information: directories,
CD-ROM and other databases (e.g., Lexis-Nexis, ABI/Inform),
periodical indices, and industry surveys and outlooks published
by a variety of organizations and current business periodicals
(e.g., Wall Street Journal, Business Week, Fortune) must be
used to provide depth to phase two of the project.
•
Using and locating non-library sources of information: the
Internet/www can be used to access the home pages of
commercial firms, government agencies (such as the Department
of Commerce or the Securities & Exchange Commission), trade
associations and brokerage firm reports for phase two of the
project.
•
Organizing what appears to be unrelated data/information into a
logical format and communicating it in a logical written form or
style.
To satisfy the major research requirement of this course, each
team will prepare, submit and present a set of recommended
strategic actions to be taken by the firm that is the focus of their

2. assigned case. The Case/Firm Strategy Project is to be
completed in two parts that will be included in a single written
report--following the requirements provided--and an oral
presentation. For additional guidance as to format, refer to the
Guidelines for Written Analyses in the course syllabus and
information provided in this document and on BlackBoard. The
completed combined analysis and update report (including
PowerPoint slides used in the presentation) must be submitted
by the date noted in the Course Outline/Schedule. Include a
Table of Contents with the name of the team member
responsible for completing each major sub-section.
•
Part one of the project requires that students perform a 1brief
analysis of information provided in the assigned case to provide
background related to the firm’s external and competitive
environments. This enables the team to [1] identify any external
opportunities and threats facing the firm, [2] describe the firm’s
competitors and their approaches to competing and [3] identify
key success factors (KSFs) for the industry.
The next section of the part one analysis requires that a firm
analysis be performed to [1] identify the firm’s strengths and
weaknesses (the value of the firm’s resources, capabilities and
competencies) relative to its competitors and key success
factors and [2] identify immediate problems or opportunities
facing the firm as well as decisions to be made as identified in
the case.
Using the external and internal and external analyses as
background, the team then will develop alternatives and make
strategy-related recommendations. This requires that the team
[1] identify alternatives available to the firm that will enable it
to solve its problems, take advantage of opportunities and offset

3. threats to its competitive success, [2] assess each alternative as
to its viability by identifying the firm’s resource-based
restrictions or advantages, in other words, identify any resource
or capability gaps and [3] identify potential solutions to
resource gaps (e.g., outsourcing, strategic alliances, joint
ventures, acquisitions).
•
Part two of the project requires that each team revise or update
the case and the team’s part one analysis and perform all
analyses described in part one using new, updated information
developed from outside research that brings the case up-to-date.
This means that, if the case ends in 2010, all major events from
2010 through October 2013 should be included in the update to
[1] identify any strategic actions taken by the firm since the
time of the cae and the outcomes of those actions, [2] identify
any external opportunities and threats facing the firm,
[3] describe the firm’s competitors and their approaches to
competing (e.g., a five forces analysis) and [4] identify key
success factors (KSFs) for the industry.
The next section of the analysis requires that teams complete an
updated analysis—2010 to the present--to [1] identify the firm’s
strengths and weaknesses (the value of the firm’s resources,
capabilities and competencies) relative to its competitors and
key success factors, [2] identify current problems or
opportunities facing the firm as well as decisions that must be
made as identified by student research and [3] provide a
discussion and tables (or graphs) setting out the firm’s financial
performance—including stock price and competitive
performance—from the time of the case to the present date..

4. Using the updated external and internal analyses as a base, the
team then will develop alternatives and make new strategy-
related recommendations. This requires that the team [1]
identify alternatives available to the firm that will enable it to
solve its current problems, take advantage of current
opportunities and offset current threats to its future competitive
success identified as a result of research, [2] assess each
alternative as to its viability by identifying the firm’s resource-
based restrictions or advantages; in other words, identify any
resource or capability gaps, [3] identify potential solutions to
resource gaps (e.g., outsourcing, strategic alliances, joint
ventures, acquisitions) and [4] make specific, detailed
recommendations--including objectives, strategy and tactics,
organizational changes, action steps, scheduling and related
changes--that will enable the firm to solve the problems, take
advantage of opportunities or make the decisions identified as a
result of current research.
The summary (or background) analysis of the original case, the
updated analysis and recommendations will be presented to the
class. A copy of the PowerPoint slides (3-to-a-page) used in the
class presentation must be submitted when the firm’s
presentation is made.
A comprehensive bibliography of all outside research sources of
information must be provided for the phase two written report.
It is required that students utilize current business periodicals
(e.g., Wall Street Journal, Business Week, Fortune, New York
Times) in addition to Internet-based sources to update
information provided in the case. Sources must be cited
throughout the report.
Useful WWW Addresses for Firm Strategy Project

5. •Information on foreign corporations
http://www.corporateinformation.com
•Press releases issued by large and small U.S. firms
http://www.hnt.com/bizwire/
•Links to specific industries http://www.industrylink.com/
•Company press releases http://www.prnewswire.com/
•Edgar--archival database of individual company annual and
quarterly reports filed with the SEC--and
information relevant to industry-level and competitor research
http://www.sec.gov/
•Directory of Standard Industrial Classification (SIC) Codes
(useful for gathering industry data)
http://www.osha.gov/oshstats/sicser.html
•Business information, reports, business profiles
http://www.cnnfn.com/index.html
•Industry and company information
http://www.companiesonline.com/
•U.S. Department of Commerce business links
http://www.doc.gov
•Free, half-page company profiles
http://www.hoovers.comhttp://www.dbisna.com/dbis/product/se
cure.html
•Competitive intelligence sites, ranging from patent information
to macroeconomic issues and search hints
http://www.fuld.com/
Access to the following publications’ archives may require a
subscription.
•Business Week Archives http://www.businessweek.com
•Wall Street Journal Archives http://www.wsj.com
•New York Times http://www.nytimes.com
•Fortune http://www.fortune.com

6. �This is what I want you to write about.
�My Partner part so you don’t have about it.
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1. Describe the three attributes of monopolistic
competition. How is monopolistic competi-
tion like monopoly? How is it like perfect
competition?
2. Draw a diagram depicting a firm that is mak-
ing a profit in a monopolistically competitive
market. Now show what happens to this firm
as new firms enter the industry.
3. Draw a diagram of the long-run equilibrium in
a monopolistically competitive market. How is
price related to average total cost? How is price
related to marginal cost?
1. Among monopoly, oligopoly, monopolistic
competition, and perfect competition, how
would you classify the markets for each of the
following drinks?

7. a. tap water
b. bottled water
c. cola
d. beer
2. Classify the following markets as perfectly
competitive, monopolistic, or monopolistically
competitive, and explain your answers.
a. wooden no. 2 pencils
b. copper
c. local telephon~ service
d. peanut butter
e. lipstick
3: For each of the following characteristics, say
whether it describes a perfectly competitive
firm, a monopolistically competitive fimi, both,
or neither.
a. Sells a product differentiated from that of its
competitors
b. Has marginal revenue less than price
4. Does a monopolistic competitor produce too
much or too little output compared to the most
efficient level? What practical considerations
it difficult for policymakers to solve this problem~
5. How might advertising reduce economic
well-being? How might advertising increase
economic well-being?
6. How might advertising with no apparent
mational content in fact convey information to
consumers?

8. 7. Explain two benefits that might arise from the
existence of brand names.
c. Earns economic profit in the long run
d. Produces at the minimum of average total
cost in the long run
e. Equates marginal revenue and marginal cost
f. Charges a price above marginal cost
4. For each of the following characteristics, say
whether it describes a monopoly firm, a monopo-
istically competitive firm, both, or neither,
a. Faces a downward-sloping demand curve
b. Has marginal revenue less than price
c. Faces the entry of new firms selling similar
products
d: Earns economic profit in the long run
e. Equates marginal revenue and marginal cost
f. Produces the socially efficient quantity of
output
5. You are hired as the consultant to a monopo-
listically competitive firm. The firm reports the
following information about its price, marginal
cost, and average total cost. Can the firm possi-
bly be maximizing profit? H not, what should it
do to increase profit? If the firm is profit maxi-
mizing, is the firm in a long-run equilibrium?
368 PARTV
FIRM BEHAVIOR AND THE ORGANIZATION OF

9. INDUSTRY
the prisoners' dilemma shows why oligopolies can fail to
maintain cooperation,
even when cooperation is in their best interest.
Policymakers regulate the behavior of oligopolists through the
antitrust laws.
The proper scope of these laws is the subject of ongoing
controversy. Although
price fixing among competing firms clearly reduces economic
welfare and should
be illegal, some business practices that appear to reduce
competition may have
legitimate if subtle purposes. As a result, policymakers need to
be careful when
they use the substantial powers of the antitrust laws to place
limits on firm behavior.
• Oligopolists maximize their total profits by
forming a cartel and acting like a monopolist.
Yet, if oligopolists make decisions about
production levels individually, the result is a
greater quantity and a lower price than under
the monopoly outcome. The larger the number
of firms in the oligopoly, the closer the quantity
and price will be to the levels that would prevail
under perfect competition.
• The prisoners' dilemma shows that self-
interest can prevent people from maintaining
cartel, p. 351
cooperation, even when cooperation is in
mutual interest. The logic of the prisoners'

10. dilemma applies in many situations, including
arms races, common-resource problems, and
oligopolies.
• Policymakers use the antitrust laws to prevent
oligopolies from engaging in behavior. that
reduces competition. The application of these
laws can be controversial, because some behavior
that can appear to reduce competition may in
fact have legitimate busiriess purposes.
oligopoly, p. 349
game theory, p. 349
collusion, p. 351 Nash equilibrium, p. 353
prisoners' dilemma, p. 355
dominant strategy, p. 356
1. If a grOup of sellers could form a cartel,
what quantity and price would they try
to set?
2. Compare the quantity and price of an oligopoly
to those of a monopoly.
3. Compare the quantity and price of an oligopoly
to those of a competitive market.
4. How does the number of firms in an oligopoly
affect the outcome in its market?
5. What is the prisoners' dilemma, and what does
it have to do with oligopoly?
6. Give two examples other than oligopoly that

11. show how the prisoners' dilemma helps to
explain behavior.
7. What kinds of behavior do the antitrust laws
prohibit?
8. What is resale price mairitenance, and why is it
controversial?
1. A large share of the world supply of diamonds
comes from Russia and South Africa. Suppose
that the marginal cost of mining diamonds
is constant at $1,000 per diamond, and the
demand for diamonds is described by the
following schedule:
Price Quantity
$8,000 · 5,000 diamonds
7,000 6,000
6,000 7,000
5,000 8,000
4,000 9,000
3,000 10,000
2,000 11,000
1,000 12,000
a. If there were many suppliers of diamonds,
what woulq be the price and quantity?
b. If there were only one supplier of diamonds,
what would be the price and quantity?
c. If Russia and South Africa formed a cartel,

12. what would be the price and quantity? If
the countries split the market evenly, what
would be South Africa's production and
profit? What would happen to South Africa's
profit if it increased its production by 1,000
while Russia stuck to the cartel agreement?
d. Use your answers to part (c) to explain why
cartel agreements are often not successful.
The New York Times (Nov. 30, 1993) reported
that "the inability of OPEC to agree last week
to cut production has sent the oil market into
turmoil ... [leading to] the lowest price for
domestic crude oil since June 1990."
a. Why were the members of OPEC trying to
agree to cut production?
b. Why do you suppose OPEC was unable to
agree on cutting production? Why. did the oil
market go into "turmoil" as a result?
c. The newspaper also noted OPEC's view "that
producing nations outside the organization,
like Norway and Britain, should do their
share and cut production." What does
the phrase "do their share" suggest about
OPEC's desired relationship with Norway
and Britain?
This chapter discusses companies that are
oligopolists in the market for the goods they
sell. Many of the same ideas apply to companies
that are oligopolists in the market for the inputs

13. they buy.
a. If sellers who are oligopolists try to increase
the price of goods they sell, what is the goal
of buyers who are oligopolists? ·
b. Major league baseball team own~ have
an oligopoly in the market for baseball
players. What is the owners' goal-regarding
players' salaries? Why is' this goal difficult
to achieve?
c. Baseball players went on strike in 1994
because they would not accept the salary
cap that the owners wanted to impose. If the
owners were already colluding over salaries,
why did the owners feel the need for a salary
cap?
4. Consider trade relations between the United
States and Mexico. Assume that the leaders
of the two countries believe the payoffs to
alternative trade policies are as follows:
Low
Tariffs
High
Tariffs
Low Tariff$ High Tariffs
a. What is the dominant strategy for the United
States? For Mexico? Explain.
b. Define Nash equilibrium. What is the Nash

14. equilibrium for trade policy?
c. In 1993, the U.S. Congress ratified the North
American Free Trade Agreement, in which
the United States and Mexico agreed to
reduce trade barriers simultaneously. Do the
perceived payoffs shown here justify this
approach to trade policy? Explain.
d. Based on your understanding of the gains
from trade (discussed in Chapters 3 and 9),
do you think that these payoffs actually
reflect a nation's welfare under the four
possible outcomes?
i l