Answer to Question #285745 in Economics of Enterprise for Charlton

Question

11. Explain why a “capital-intensive” industry can be difficult to enter for an entrepreneur. What might the entrepreneur do to overcome the entry barriers to a capital-intensive industry?

12. How can a technology company recruit and retain valued knowledge workers? Give an example of a company that excels in this regard. What does it do that makes it successful?

13. What are CEOs of global companies saying about the pace of change in the global economy? How can a technology venture deal with an accelerating pace of change?

14. How did Microsoft adjust its strategy in the Chinese market? What mistakes did it make in the early days in that market?

15. Explain what is meant by the term “sustainable competitive advantage.” What should a technology venture do in the modern global economy to develop this?

Answer 1

Solution:

11.). A capital-intensive industry can be difficult to enter due to the large capital investment and time required to develop a competing branded product.

The entrepreneur can overcome the entry barriers to a capital-intensive industry by undertaking the following cost reduction activities:

·        Rather than buy equipment, you can lease them or space to reduce fixed costs.

·        Be more creative and outdo existing firms in terms of high-quality research.

·        Adopt lean and flexible manufacturing and supply on demand.

 

12.). A technology company can recruit and retain valued knowledge workers through the following ways:

·        Offer appealing perks and benefits to attract quality recruits.

·        Demonstrate a pleasant working culture.

·        Encourage and motivate employees.

·        Provide a flexible schedule and room for expansion and growth.

·        Utilize modern technology.

An example of a company that excels in this regard is Apple Inc. The company offers flexible schedules, sign-on bonuses, higher perks, and other benefits, and free college tuition payments.

 

13.). The CEOs are concerned with the rapid change and increase in the global economy especially with regards to technology, climate, and environmental change.

A technology venture should focus on incremental changes rather than disruptions, enhance positive changes, prioritize low-cost ideas and provide feedback.

 

14.). Microsoft realized it had to change its pricing strategy by charging lower prices in China in order to boost its sales. It also abandoned the public-policy strategy it used elsewhere of protecting its intellectual property at all costs and closely partnering with the government instead of fighting it.

The mistake the company did early on was selling its products at the same price it was sold elsewhere, having a strict intellectual property policy, and not collaborating with the government.

 

15.). A sustainable competitive advantage refers to an advantage that permits a business to be more successful than its competitors over a long period. A business has a sustainable competitive advantage when it acquires some qualities or attributes which are different from other competitors and difficult to duplicate.

A technological venture can develop a sustainable competitive advantage with technological innovation that can help your company cement its place as an industry leader. You should understand the market and its segments, develop a strong understanding with customers and establish a value proposition that attracts their attention.