categories/forces that impact the sustainability of

industry profits and state of competition

250 10 Q
= - is primarily a tool for helping managers see the
10 10
"big picture"
25=Q - it is a schematic you can use to organize various
industry conditions that affect industry profitability
*When Q=25 the manager ensures that NMB are
and assess the efficacy of alternative business
maximized. This is where MB=MC at the level of strategies
- it would be a mistake to view it as a
Q that maximizes net benefits*
comprehensive list of all factors that affect industry
2.) An engineering firm conducted a study to profitability
- it is not a substitute for understanding the
determine the benefits and cost structures:
economic principles that underlie sound business
B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2 decisions
- can be used to identify state of competition and
Determine the MB and MC functions? profitability of an industry
MB ( Q )=300−12 Q
►NOTE
MC (Q )=8 Q
- A key theme of this textbook is that many
What level of Q maximizes net benefits?
interrelated forces and decisions influence
300−12Q=8 Q
250 10 Q
300=8 Q+ 12Q =
10 10
300 20 Q 25=Q
=
20 20
*When Q=25 the manager ensures that NMB are
15=Q (The optimal level of Q is = 15)
maximized. This is where MB=MC at the level of
What is marginal benefit and marginal
Q that maximizes net benefits*
cost at this level of Q?
2.) An engineering firm conducted a study to
MB=300−12 ( 15 )=120
determine the benefits and cost structures:
MC=8 ( 15 ) =120
B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2
Determine the maximum level of net
Determine the MB and MC functions?
benefits at this level of Q?
MB ( Q )=300−12 Q
MNB=MB−MC
MC (Q )=8 Q
MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿
What level of Q maximizes net benefits?
MNB=4,500−1,350−900=2,250
300−12Q=8 Q
*2,250 is the amount at which the engineering
300=8 Q+ 12Q
firm maximizes profits*
300 20 Q
=
20 20
• FIVE FORCES FRAMEWORK AND
15=Q (The optimal level of Q is = 15)
INDUSTRY PROFITABILITY:
What is marginal benefit and marginal
- pioneered by Michael Porter
- this framework organizes many complex cost at this level of Q?
managerial economics issues into five MB=300−12 ( 15 )=120
 MC=8 ( 15 ) =120 2.) An engineering firm conducted a study to
Determine the maximum level of net determine the benefits and cost structures:
benefits at this level of Q? B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2
MNB=MB−MC Determine the MB and MC functions?
MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿ MB ( Q )=300−12 Q
MNB=4,500−1,350−900=2,250 MC (Q )=8 Q
*2,250 is the amount at which the engineering What level of Q maximizes net benefits?
firm maximizes profits* 300−12Q=8 Q
300=8 Q+ 12Q
• FIVE FORCES FRAMEWORK AND
300 20 Q
INDUSTRY PROFITABILITY: =
20 20
- pioneered by Michael Porter 15=Q (The optimal level of Q is = 15)
- this framework organizes many complex
managerial economics issues into five What is marginal benefit and marginal
categories/forces that impact the sustainability of cost at this level of Q?
industry profits and state of competition
- is primarily a tool for helping managers see the MB=300−12 ( 15 )=120
"big picture" MC=8 ( 15 ) =120
- it is a schematic you can use to organize various
industry conditions that affect industry profitability Determine the maximum level of net
and assess the efficacy of alternative business benefits at this level of Q?
strategies
- it would be a mistake to view it as a MNB=MB−MC
comprehensive list of all factors that affect industry MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿
profitability
- it is not a substitute for understanding the MNB=4,500−1,350−900=2,250
economic principles that underlie sound business
*2,250 is the amount at which the engineering
decisions
- can be used to identify state of competition and firm maximizes profits*
profitability of an industry
• FIVE FORCES FRAMEWORK AND
►NOTE
INDUSTRY PROFITABILITY:
- A key theme of this textbook is that many
- pioneered by Michael Porter
interrelated forces and decisions influence
- this framework organizes many complex
250 10 Q managerial economics issues into five
=
10 10 categories/forces that impact the sustainability of
industry profits and state of competition
25=Q - is primarily a tool for helping managers see the
*When Q=25 the manager ensures that NMB are "big picture"
- it is a schematic you can use to organize various
maximized. This is where MB=MC at the level of industry conditions that affect industry profitability
Q that maximizes net benefits* and assess the efficacy of alternative business
strategies
- it would be a mistake to view it as a MNB=4,500−1,350−900=2,250
comprehensive list of all factors that affect industry
*2,250 is the amount at which the engineering
profitability
- it is not a substitute for understanding the firm maximizes profits*
economic principles that underlie sound business
decisions
• FIVE FORCES FRAMEWORK AND
- can be used to identify state of competition and
profitability of an industry INDUSTRY PROFITABILITY:
- pioneered by Michael Porter
►NOTE
- this framework organizes many complex
- A key theme of this textbook is that many managerial economics issues into five
categories/forces that impact the sustainability of
interrelated forces and decisions influence
industry profits and state of competition
250 10 Q - is primarily a tool for helping managers see the
=
10 10 "big picture"
- it is a schematic you can use to organize various
25=Q
industry conditions that affect industry profitability
*When Q=25 the manager ensures that NMB are and assess the efficacy of alternative business
strategies
maximized. This is where MB=MC at the level of
- it would be a mistake to view it as a
Q that maximizes net benefits* comprehensive list of all factors that affect industry
profitability
2.) An engineering firm conducted a study to
- it is not a substitute for understanding the
determine the benefits and cost structures: economic principles that underlie sound business
decisions
B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2 - can be used to identify state of competition and
Determine the MB and MC functions? profitability of an industry

MB ( Q )=300−12 Q ►NOTE
MC (Q )=8 Q - A key theme of this textbook is that many
What level of Q maximizes net benefits? interrelated forces and decisions influence
300−12Q=8 Q 250 10 Q
=
300=8 Q+ 12Q 10 10

300 20 Q 25=Q
=
20 20 *When Q=25 the manager ensures that NMB are
15=Q (The optimal level of Q is = 15) maximized. This is where MB=MC at the level of
What is marginal benefit and marginal Q that maximizes net benefits*
cost at this level of Q? 2.) An engineering firm conducted a study to
MB=300−12 ( 15 )=120 determine the benefits and cost structures:
MC=8 ( 15 ) =120 B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2
Determine the maximum level of net Determine the MB and MC functions?
benefits at this level of Q? MB ( Q )=300−12 Q
MNB=MB−MC MC (Q )=8 Q
MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿ What level of Q maximizes net benefits?
 300−12Q=8 Q 250 10 Q
=
300=8 Q+ 12Q 10 10
25=Q
300 20 Q
=
20 20 *When Q=25 the manager ensures that NMB are
15=Q (The optimal level of Q is = 15) maximized. This is where MB=MC at the level of
What is marginal benefit and marginal Q that maximizes net benefits*
cost at this level of Q? 2.) An engineering firm conducted a study to
MB=300−12 ( 15 )=120 determine the benefits and cost structures:
MC=8 ( 15 ) =120 B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2
Determine the maximum level of net Determine the MB and MC functions?
benefits at this level of Q? MB ( Q )=300−12 Q
MNB=MB−MC MC (Q )=8 Q
MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿ What level of Q maximizes net benefits?
MNB=4,500−1,350−900=2,250 300−12Q=8 Q
*2,250 is the amount at which the engineering 300=8 Q+ 12Q
firm maximizes profits* 300 20 Q
=
20 20
• FIVE FORCES FRAMEWORK AND 15=Q (The optimal level of Q is = 15)
INDUSTRY PROFITABILITY: What is marginal benefit and marginal
- pioneered by Michael Porter cost at this level of Q?
- this framework organizes many complex
managerial economics issues into five MB=300−12 ( 15 )=120
categories/forces that impact the sustainability of MC=8 ( 15 ) =120
industry profits and state of competition
- is primarily a tool for helping managers see the Determine the maximum level of net
"big picture" benefits at this level of Q?
- it is a schematic you can use to organize various
industry conditions that affect industry profitability MNB=MB−MC
and assess the efficacy of alternative business MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿
strategies
- it would be a mistake to view it as a MNB=4,500−1,350−900=2,250
comprehensive list of all factors that affect industry *2,250 is the amount at which the engineering
profitability
- it is not a substitute for understanding the firm maximizes profits*
economic principles that underlie sound business
decisions • FIVE FORCES FRAMEWORK AND
- can be used to identify state of competition and
profitability of an industry INDUSTRY PROFITABILITY:
- pioneered by Michael Porter
►NOTE - this framework organizes many complex
- A key theme of this textbook is that many managerial economics issues into five
categories/forces that impact the sustainability of
interrelated forces and decisions influence industry profits and state of competition
- is primarily a tool for helping managers see the Determine the maximum level of net
"big picture"
benefits at this level of Q?
- it is a schematic you can use to organize various
industry conditions that affect industry profitability MNB=MB−MC
and assess the efficacy of alternative business
MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿
strategies
- it would be a mistake to view it as a MNB=4,500−1,350−900=2,250
comprehensive list of all factors that affect industry
profitability *2,250 is the amount at which the engineering
- it is not a substitute for understanding the firm maximizes profits*
economic principles that underlie sound business
decisions
- can be used to identify state of competition and • FIVE FORCES FRAMEWORK AND
profitability of an industry INDUSTRY PROFITABILITY:

►NOTE - pioneered by Michael Porter

- this framework organizes many complex
- A key theme of this textbook is that many managerial economics issues into five
interrelated forces and decisions influence categories/forces that impact the sustainability of
industry profits and state of competition
250 10 Q - is primarily a tool for helping managers see the
=
10 10 "big picture"
- it is a schematic you can use to organize various
25=Q
industry conditions that affect industry profitability
*When Q=25 the manager ensures that NMB are and assess the efficacy of alternative business
strategies
maximized. This is where MB=MC at the level of
- it would be a mistake to view it as a
Q that maximizes net benefits* comprehensive list of all factors that affect industry
profitability
2.) An engineering firm conducted a study to
- it is not a substitute for understanding the
determine the benefits and cost structures: economic principles that underlie sound business
decisions
B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2 - can be used to identify state of competition and
Determine the MB and MC functions? profitability of an industry
MB ( Q )=300−12 Q ►NOTE
MC (Q )=8 Q - A key theme of this textbook is that many
What level of Q maximizes net benefits? interrelated forces and decisions influence
300−12Q=8 Q 250 10 Q
=
300=8 Q+ 12Q 10 10
300 20 Q 25=Q
=
20 20 *When Q=25 the manager ensures that NMB are
15=Q (The optimal level of Q is = 15) maximized. This is where MB=MC at the level of
What is marginal benefit and marginal Q that maximizes net benefits*
cost at this level of Q? 2.) An engineering firm conducted a study to
MB=300−12 ( 15 )=120 determine the benefits and cost structures:
MC=8 ( 15 ) =120 B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2
Determine the MB and MC functions? What level of Q maximizes net benefits?
MB ( Q )=300−12 Q 300−12Q=8 Q
MC (Q )=8 Q 300=8 Q+ 12Q
What level of Q maximizes net benefits? 300 20 Q
=
20 20
300−12Q=8 Q
15=Q (The optimal level of Q is = 15)
300=8 Q+ 12Q
What is marginal benefit and marginal
300 20 Q
=
20 20 cost at this level of Q?
15=Q (The optimal level of Q is = 15) MB=300−12 ( 15 )=120
What is marginal benefit and marginal MC=8 ( 15 ) =120
cost at this level of Q? Determine the maximum level of net
MB=300−12 ( 15 )=120 benefits at this level of Q?
MC=8 ( 15 ) =120 MNB=MB−MC
Determine the maximum level of net MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿
benefits at this level of Q? MNB=4,500−1,350−900=2,250
MNB=MB−MC *2,250 is the amount at which the engineering
MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿ firm maximizes profits*
MNB=4,500−1,350−900=2,250
• FIVE FORCES FRAMEWORK AND
*2,250 is the amount at which the engineering
INDUSTRY PROFITABILITY:
firm maximizes profits*
- pioneered by Michael Porter
- this framework organizes many complex
• FIVE FORCES FRAMEWORK AND managerial economics issues into five
INDUSTRY PROFITABIL categories/forces that impact the sustainability of
industry profits and state of competition
250 10 Q - is primarily a tool for helping managers see the
=
10 10 "big picture"
25=Q - it is a schematic you can use to organize various
industry conditions that affect industry profitability
*When Q=25 the manager ensures that NMB are and assess the efficacy of alternative business
maximized. This is where MB=MC at the level of strategies
- it would be a mistake to view it as a
Q that maximizes net benefits* comprehensive list of all factors that affect industry
2.) An engineering firm conducted a study to profitability
- it is not a substitute for understanding the
determine the benefits and cost structures: economic principles that underlie sound business
B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2 decisions
- can be used to identify state of competition and
Determine the MB and MC functions? profitability of an industry
MB ( Q )=300−12 Q
►NOTE
MC (Q )=8 Q
- A key theme of this textbook is that many - this framework organizes many complex
managerial economics issues into five
interrelated forces and decisions influence
categories/forces that impact the sustainability of
250 10 Q industry profits and state of competition
=
10 10 - is primarily a tool for helping managers see the
"big picture"
25=Q
- it is a schematic you can use to organize various
*When Q=25 the manager ensures that NMB are industry conditions that affect industry profitability
and assess the efficacy of alternative business
maximized. This is where MB=MC at the level of
strategies
Q that maximizes net benefits* - it would be a mistake to view it as a
comprehensive list of all factors that affect industry
2.) An engineering firm conducted a study to
profitability
determine the benefits and cost structures: - it is not a substitute for understanding the
economic principles that underlie sound business
B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2 decisions
Determine the MB and MC functions? - can be used to identify state of competition and
profitability of an industry
MB ( Q )=300−12 Q
MC (Q )=8 Q ►NOTE

What level of Q maximizes net benefits? - A key theme of this textbook is that many

300−12Q=8 Q interrelated forces and decisions influence

300=8 Q+ 12Q 250 10 Q

=
10 10
300 20 Q
= 25=Q
20 20
15=Q (The optimal level of Q is = 15) *When Q=25 the manager ensures that NMB are

What is marginal benefit and marginal maximized. This is where MB=MC at the level of

cost at this level of Q? Q that maximizes net benefits*

MB=300−12 ( 15 )=120 2.) An engineering firm conducted a study to

determine the benefits and cost structures:
MC=8 ( 15 ) =120
Determine the maximum level of net B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2

benefits at this level of Q? Determine the MB and MC functions?

MNB=MB−MC MB ( Q )=300−12 Q

MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿ MC (Q )=8 Q

MNB=4,500−1,350−900=2,250 What level of Q maximizes net benefits?

*2,250 is the amount at which the engineering 300−12Q=8 Q

firm maximizes profits* 300=8 Q+ 12Q

300 20 Q
=
• FIVE FORCES FRAMEWORK AND 20 20
INDUSTRY PROFITABILITY: 15=Q (The optimal level of Q is = 15)
- pioneered by Michael Porter
 What is marginal benefit and marginal *When Q=25 the manager ensures that NMB are
cost at this level of Q? maximized. This is where MB=MC at the level of
MB=300−12 ( 15 )=120 Q that maximizes net benefits*
MC=8 ( 15 ) =120 2.) An engineering firm conducted a study to
Determine the maximum level of net determine the benefits and cost structures:
benefits at this level of Q? B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2
MNB=MB−MC Determine the MB and MC functions?
MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿ MB ( Q )=300−12 Q
MNB=4,500−1,350−900=2,250 MC (Q )=8 Q
*2,250 is the amount at which the engineering What level of Q maximizes net benefits?
firm maximizes profits* 300−12Q=8 Q
300=8 Q+ 12Q
• FIVE FORCES FRAMEWORK AND
300 20 Q
INDUSTRY PROFITABILITY: =
20 20
- pioneered by Michael Porter 15=Q (The optimal level of Q is = 15)
- this framework organizes many complex
managerial economics issues into five What is marginal benefit and marginal
categories/forces that impact the sustainability of cost at this level of Q?
industry profits and state of competition
- is primarily a tool for helping managers see the MB=300−12 ( 15 )=120
"big picture" MC=8 ( 15 ) =120
- it is a schematic you can use to organize various
industry conditions that affect industry profitability Determine the maximum level of net
and assess the efficacy of alternative business benefits at this level of Q?
strategies
- it would be a mistake to view it as a MNB=MB−MC
comprehensive list of all factors that affect industry MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿
profitability
- it is not a substitute for understanding the MNB=4,500−1,350−900=2,250
economic principles that underlie sound business *2,250 is the amount at which the engineering
decisions
- can be used to identify state of competition and firm maximizes profits*
profitability of an industry
• FIVE FORCES FRAMEWORK AND
►NOTE
INDUSTRY PROFITABILITY:
- A key theme of this textbook is that many
- pioneered by Michael Porter
interrelated forces and decisions influence - this framework organizes many complex
250 10 Q managerial economics issues into five
=
10 10 categories/forces that impact the sustainability of
industry profits and state of competition
25=Q - is primarily a tool for helping managers see the
"big picture"
- it is a schematic you can use to organize various
industry conditions that affect industry profitability
and assess the efficacy of alternative business MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿
strategies
MNB=4,500−1,350−900=2,250
- it would be a mistake to view it as a
comprehensive list of all factors that affect industry *2,250 is the amount at which the engineering
profitability
- it is not a substitute for understanding the firm maximizes profits*
economic principles that underlie sound business
decisions • FIVE FORCES FRAMEWORK AND
- can be used to identify state of competition and
profitability of an industry INDUSTRY PROFITABILITY:
- pioneered by Michael Porter
►NOTE - this framework organizes many complex
- A key theme of this textbook is that many managerial economics issues into five
categories/forces that impact the sustainability of
interrelated forces and decisions influence industry profits and state of competition
250 10 Q - is primarily a tool for helping managers see the
= "big picture"
10 10
- it is a schematic you can use to organize various
25=Q industry conditions that affect industry profitability
and assess the efficacy of alternative business
*When Q=25 the manager ensures that NMB are
strategies
maximized. This is where MB=MC at the level of - it would be a mistake to view it as a
comprehensive list of all factors that affect industry
Q that maximizes net benefits*
profitability
2.) An engineering firm conducted a study to - it is not a substitute for understanding the
economic principles that underlie sound business
determine the benefits and cost structures:
decisions
B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2 - can be used to identify state of competition and
profitability of an industry
Determine the MB and MC functions?
MB ( Q )=300−12 Q ►NOTE

MC (Q )=8 Q - A key theme of this textbook is that many

What level of Q maximizes net benefits? interrelated forces and decisions influence

300−12Q=8 Q 250 10 Q
=
10 10
300=8 Q+ 12Q
25=Q
300 20 Q
= *When Q=25 the manager ensures that NMB are
20 20
15=Q (The optimal level of Q is = 15) maximized. This is where MB=MC at the level of

What is marginal benefit and marginal Q that maximizes net benefits*

cost at this level of Q? 2.) An engineering firm conducted a study to

MB=300−12 ( 15 )=120 determine the benefits and cost structures:

MC=8 ( 15 ) =120 B (Q )=300 Q−6 Q 2 ; C ( Q ) =4 Q 2

Determine the maximum level of net Determine the MB and MC functions?

benefits at this level of Q? MB ( Q )=300−12 Q

MNB=MB−MC MC (Q )=8 Q
 What level of Q maximizes net benefits? - A key theme of this textbook is that many
300−12Q=8 Q interrelated forces and decisions influence ITY:
300=8 Q+ 12Q - pioneered by Michael Porter
- this framework organizes many complex
300 20 Q
= managerial economics issues into five
20 20
categories/forces that impact the sustainability of
15=Q (The optimal level of Q is = 15) industry profits and state of competition
- is primarily a tool for helping managers see the
What is marginal benefit and marginal
"big picture"
cost at this level of Q? - it is a schematic you can use to organize various
industry conditions that affect industry profitability
MB=300−12 ( 15 )=120
and assess the efficacy of alternative business
MC=8 ( 15 ) =120 strategies
- it would be a mistake to view it as a
Determine the maximum level of net comprehensive list of all factors that affect industry
benefits at this level of Q? profitability
- it is not a substitute for understanding the
MNB=MB−MC economic principles that underlie sound business
MNB=300 ( 15 )−6(15¿ ¿2)−4(15 ¿¿ 2) ¿ ¿ decisions
- can be used to identify state of competition and
MNB=4,500−1,350−900=2,250 profitability of an industry
*2,250 is the amount at which the engineering
►NOTE
firm maximizes profits*
- A key theme of this textbook is that many interrelated
forces and decisions influence
• FIVE FORCES FRAMEWORK AND
INDUSTRY PROFITABILITY:
- pioneered by Michael Porter
- this framework organizes many complex
managerial economics issues into five
categories/forces that impact the sustainability of
industry profits and state of competition
- is primarily a tool for helping managers see the
"big picture"
- it is a schematic you can use to organize various
industry conditions that affect industry profitability
and assess the efficacy of alternative business
strategies
- it would be a mistake to view it as a
comprehensive list of all factors that affect industry
profitability
- it is not a substitute for understanding the
economic principles that underlie sound business
decisions
- can be used to identify state of competition and
profitability of an industry

►NOTE