Midterm Answers

Matt Brandon Regier / Bronowitz December 3, 2008 Midterm Midterm Exam Irene Viento made many mistakes. The first one was her research method. For some reason, all of the signs that typically point to a poor investment registered as signals of lucrative opportunity with her. Opening a niche store in an area where there are 10 others just like it within 8 miles is foolish. Also, she assumed that she knew what other grandparents wanted just because she was one. I might be a hunter, but that does not mean that I am equipped to sell guns or hunting gear. This business seems haphazard. My suggestion to Viento would have been to not open the shop. Take the money and open a completely different store, or invest it somewhere else where the return would be better than a negative $40,000 over the course of three years. She did not have the resources to start a price war with competitors, nor was she selling anything different from them. This basically set her up for failure in an already tapped market. Gas stations litter most major cities similar to the way that Starbucks does. There is one on virtually every corner and they all sell the same product. Part of the reason that the companies that control the gas can afford to have so many stations is because people need their product. This results in an enormous amount of traffic for each station. With so many people coming around, it would be hard for companies to justify not selling more products to turn a higher profit, even if they are completely unrelated to the gasoline that they originally came for. Gas stations have become convenience stores because of people?s need to one-stop-shop. Most entrepreneurs do not control the prices of their products because there is usually a comparable product somewhere in the market that already has a set price. The new product will not sell at a price greater than the set price unless it is specialized in some way. On rare occasions, entrepreneurs come up with products that have never been seen before and they are able to set the price. An example of this situation is the iPhone, which was originally priced around $600, a price that no one would pay today because there are comparable phones on the market for much less. Individuals are drawn to certain locations based on the level of diversity in an area, the amount of high-technology firms, income levels, regional amenities, nightlife, house-value, and low barriers to entry for talent. The main point of the article seems to be that times are changing, and one should not be surprised if traditional methods are overturned completely. As I become more established with my career, I know not to get used to a single way of doing things or be angry at change. The change discussed in the article could be very helpful and profitable, and more surprises like that are sure to come with time.