Business Adminstration
Directions: Answer the following short answer and essay questions. It is important to understand that these questions come from the materials from the course (i.e., video lectures, readings, etc.). You are under no obligation to use any outside research (nor should you).
Answer the question(s) as best you can. The answers that earn the most points synthesize and incorporate as many of the sources that are appropriate (i.e. lectures, readings, etc) and give the most detailed information. I expect all associated examples from class to be included in your essays unless otherwise noted.
Make sure that you include your name at the top of this exam and make sure that you leave this exam formatted as you see it and just include your answers below each question provided. All of the instructions and questions are in bold, but your answers/essays should be non-bold, 12 font, 1.15 spacing, Times New Roman font
SHORT ANSWERS
Question 1, (10 Points, Answer Questions a-g)
Imagine that there is an industry made up of 300 firms. You have data on the 9 largest firms below. You don’t have the revenues for 291 of the firms in the industry but one piece of critical information that you do know is that Company B has 12.5% market share.
Company Name Annual Revenues ($)
A 100
B 80
C 64
D 63
E 38
F 30
G 22
H 19
I 19
Answer the following questions (Round to 2 decimals if you need to round):
What is the CR4?
What is the CR8?
What is the HHI?
What is the total industry revenue?
What type of industry would you categorize this as?
Assuming the 10th company (company not listed above in the data) would not have to be included in the HHI because it didn’t meet the threshold for inclusion in an HHI calculation, what is the maximum revenue that this company could have?
Assume that the 291 other firms in the industry (ones for which you have no data on) split the industry revenue not covered by the 9 firms above exactly equally. How much revenue would each have?
Question 2 (5 Points, Suggested Length 1-2 sentences)
The right side of the industry structure number line is quite boring as it goes from a duopoly (HHI=5000) to a monopoly (HHI=10000). Despite this, why is it (the right side of the number line) important?
Question 3 (5 Points, Suggested Length 1-2 sentences)
What is the overarching purpose of the PEST Model? In other words, why is it included in the course?
NOTE: Think about what is being asked — you are not being asked to go through a full description of the PEST Model. No examples needed in this answer.
ESSAYS
Question 1 (20 Points, Suggested Length 100 +/- Words)
Discuss the difference between real shocks (exogenous events) and issues that may seem like shocks (endogenous events) that managers must be aware of.
Question 2 (25 Points, Suggested Length 350+ Words)
Industry structure is an important part of the class because it conditions the competitive dynamics of the firms within a given industry. For example, horizontal coordination (i.e., coordination between competitors) is more or less prevalent in certain industry types. In an essay, discuss the issues of coordination (or the inability to coordinate) in fragmented industries and oligopolistic industries.
