4C Firms Decisions & Strategies

Question 1

Why would firms want to undertake strategies affecting revenue & costs

Answer 1

Because of a firm’s objectives, will only carry out if they expect rise in revenue to exceed rise in costs + alt objectives

1. Existing level of competition
2. Potential level of competition
3. External factors

Question 2

How does existing level of competition affect lvl of competition

Question 3

How does potential level of competition affect firms strategies

Question 4

How does external factors affect firms strategies

Question 5

What are the strategies used by firms to raise revenue &/lower cost

Answer 5

1. Growth (internal & external), diversification(horizontal, vertical, forward, backward) , shutdown
2. Price competition
3. 3rd degree price discrimination
4. Innovation R&D
5. Marketing
6. Collusion w other firms (tacit; price leadership & explicit; cartel)