coming soon…student workshops - amazon simple storage...
TRANSCRIPT
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Comingsoon…StudentWorkshops
StrongFoundations– forYear13sinNovemberandDecember2016,atVueCinemasinPortsmouth,London,Cambridge,Birmingham,Bristol,Manchester,Leeds,andGateshead–limitedticketsleft!
AlsoFlyingStart forYear12sandGradeBooster forYear13s,MarchtoMay
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SessionAims
• Understandingtheconceptofacontestablemarketandsomeofitscharacteristics
• Understandwhatimpactsonlevelsofcontestability
Contestability
• 4resourcesforintroducingandtestingtheseconcepts
Resources
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ContestableMarkets
isamarket structurewherethereisfreedomofentryandexit.
thelevelofcompetitioninamarket
Acontestablemarket…… Contestablemarkettheoryisnot….
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ContestableMarkets
isamarket structurewherethereisfreedomofentryandexit.
Acontestablemarket……
Thebehaviour offirmsisdeterminedbythepotential forcompetition.
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ContestableMarkets
Perfectlycontestable
Zerocontestability
Marketsoperatemorelikeaperfectly
competitivemarket
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ContestableMarkets
Perfectlycontestable
Zerocontestability
Highstreetbanks Smartphone CityWalking
toursFastfoodrestaurant
Streamingvideos
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SunkCosts
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A-G H-N O-S T-Z
Barrierstoexit- SunkCosts
Sunkcostscannotberecoveredifabusinessdecidestoleaveanindustry.Sunkcostsincludeassetwrite-offs,closurecosts(suchasredundancypay,penaltycostsonleasing)andlossofbusinessreputation.
Whattypeofsunkcostscouldexistforthefollowingbusinessesiftheyweretoleavetheindustry?
Abudgethotelchain CourierService
Doggroomingservice
Breakfastcerealmanufacturer
Lossofreputationiffirmhasother
businessconcerns
Redundancycosts
Baddebtsowedbyowner
Assetwrite-offsformachinery
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Barrierstoexit- SunkCosts
Thinkofamethodthatabusinesscouldusetoreducethosesunkcosts
Lossofreputationiffirmhasother
businessconcerns
Redundancycosts
Baddebtsowedbyowner
Assetwrite-offsformachinery
Abudgethotelchain CourierService
Doggroomingservice
Breakfastcerealmanufacturer
Sellchaintoestablishedfirm
Employpeopleonfixedtermcontracts
Considerownershipstatus
Leasemachinery
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SunkCosts
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HitandRunEntry
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HitandRunEntry
Whenabusinessentersanindustrytotakeadvantageoftemporarilysupernormalprofits
ANewMarket– theHomeAssistant
Inlate2016,bothAmazonandGoogleintroducedthelatestversionsoftheirhomeassistants– TheAmazonEchoandGoogleHome.
Botharevoiceactivatedspeakersthatusethehomewifi toanswerquestionsposed.Youcanaskforallsortsofinformationincludingweatherforecasts,trafficdetails,calendarevents.Youcanalsocontrolanyaspectofthe‘smarthome’(e.g.yourlights!)aswellasplaymusic.
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HitandRunEntry
Whenabusinessentersanindustrytotakeadvantageoftemporarilysupernormalprofits
ANewMarket– theHomeAssistant
ThekeytoagoodHomeAssistantisthedevelopmentofsophisticatedsearchengines.Thisisconsideredamarketwithgreatpotentialtomakesupernormalprofits.
Task1
WhatactivitieswouldyoulikeyourHomeAssistanttoundertake?Remember,itcanonlygiveanswersinaudioformat!
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HitandRunEntry
Whenabusinessentersanindustrytotakeadvantageoftemporarilysupernormalprofits
ANewMarket– theHomeAssistant
Task2
WhichotherfirmscouldpotentiallyenterthemarketforcreatingHomeAssistants?
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HitandRunEntry
Whenabusinessentersanindustrytotakeadvantageoftemporarilysupernormalprofits
ANewMarket– theHomeAssistant
Task3
WhatbarrierstoentryandexitfortheHomeAssistantmarketcouldexist?
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HitandRunEntry
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Impactofcontestabilityonamarket
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Impactofcontestabilityonamarket
Uberisation
UberTechnologiesInc aremostfamousfortheirtaxiservicewhereconsumersusetheirsmartphonestosubmitrequestsanditssoftwarefindsthenearestdriver.Thecompanyhasnowmovedintoothermarketsincludingfooddelivery,packagedeliveries,andcarpooling,aswellasawater-taxiserviceinTurkey.
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Impactofcontestabilityonamarket
Uberisation
Thesuccessofthecompanyhasgivenrisetotheterm‘uberisation’– wherefirmsareusingthepowerofpeer-to-peertransactionstoreducecostsandimproveservicesforconsumers.
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Impactofcontestabilityonamarket
Uberisation
Task 1: What other possible industries could see a rise in ‘peer-to-peer’ transactions, where technology allows consumers and suppliers to interact more quickly or without a third party organisation’s involvement?
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Impactofcontestabilityonamarket
Uberisation
Task 2: What is the likely impact on the grocery market if Uber expands its food delivery service? How would established grocery stores respond?
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Impactofcontestabilityonamarket
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Levelsofcontestability
Contestabilitywithinamarketisdeterminedbyfactorsotherthanjustsunkcosts
Consumerloyalty Regulations
Accesstotechnology
forproduction
Informationforsupplier
Accesstorawmaterials
Accesstoskilledlabour
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ContestabilityBoxing
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ContestabilityBoxing
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ContestabilityBoxing
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ContestableMarkets
Perfectlycontestable
Zerocontestability
Highstreetbanks Smartphone CityWalking
toursFastfoodrestaurant
Streamingvideos
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Today’sResources
§ Today’s resources will also appear on the tutor2u economicsFacebook pages and the tutor2u blog§ https://www.facebook.com/groups/edexceleconomicsteache
rs/§ https://www.facebook.com/groups/ocreconomicsteachers/§ https://www.facebook.com/groups/aqaeconomicsteachers/
§ Sign up to our Daily Digest to receive an email every morning:www.tutor2u.net/dailydigest
§ Please follow us on Twitter @tutor2uEcon, @tutor2uGeoff,@tutor2u_jon and spread the word…
AnyQuestions?
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