Business policies

This is mostly a strategy class. Use and think about strategy. PLEASE DON’T WRITE IT IN like AN ESSAY FORMAT. Please answer the questions in a strategic way.

Please read this case with the aim of understanding the economics of retail sales! Focus in particular on the costs of entry, the nature of rivalry (and the impact of rivalry on costs and prices), the power of suppliers and buyers, and the relative value of substitutes. Be prepared with #s to back up your understanding of the case.

Class Preparation Questions

Are the buyers of this industry price sensitive? Do these buyers who wield substantial power over the prices that firms in the industry can charge? Why/why not?

What are the substitutes for this industry’s products? Do those substitutes exert significant downward pressure on prices (or upward pressure on costs)? Why?

Are industry participants confronted with suppliers who have substantial power to raise costs and buyers who have substantial power to reduce price? Why/why not?

What resources/investments would an organization need in order to enter into street level drug sales? Would you consider entry into this industry to be “easy” or “hard”?

What form does rivalry take in this industry – does it involve price wars or competition that raises costs? Does rivalry suppress expected industry profits?