Question

Your former college roommate calls you and asks to borrow $18,000 so that he can open a pizza restaurant in his hometown. He acknowledges there is a high degree or rivalry in the market in which he will operate, the cost of entry is low, and there are numerous substitutes for pizza. However, he believes that his pizza restaurant will have some sustained competitive advantages. For example, he plans to have sawdust on the floor, a variety of imported beers, and a late-night delivery service. What are the risks in lending him the money? Describe in 250-300 words

Answer 1

Porter 5 forces design for international energy market:

Competitive competition: The competitive competition is intense and there are a great deal of players running in the exact same organisation.
Danger of new entrants: It is high as the cost of entry is low.
Danger of replacement: It is high as there are other alternative items offered for the item.
Bargaining power of purchasers: It is high as they have numerous choices to choose from in the market.
Haggling power of providers: It is low as there are numerous suppliers readily available in the market.
The item distinction like sawdust on the floor, a range of imported beers, and a late-night shipment service are easily replicable by other gamers and will not result in sustained competitive benefit. Thus it does not make company sense to lend money to college roommate.