Read: One industry with an impact on both undergraduate and MBA students is textbook publishing. Traditional printed...

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Economics

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One industry with an impact on both undergraduate and MBAstudents is textbook publishing. Traditional printed textbooks arebeing challenged on one hand by self-publishing firms offering verylow prices for specific instructor materials, and on the other handby a need to offer digital resources that substitute for printedmaterials. Large textbook publishers are increasingly investing inadaptive learning systems such as Wiley-PLUS, Cengage MindTap, andMcGraw-Hill Connect. Complicating factors for the publishers is thechanging business model of renting textbooks (printed andelectronic). U.S. university book rental was about 25 percent ofstudent purchasing volume in 2015.
Use the five forces model (with complements) to think through thevarious impacts such technology shifts may have on the textbookindustry. Include in your response answers to the followingquestions.
(a) Identify the threat of new entrants. Choose one of theconcepts (Economies of scale, Network effects, Customer switchingcosts, Capital requirements, Advantages independent of size,Government policy, Credible threat of retaliation) to discuss theintensity of threat of new entrants. And discuss whether theintensity of threat of new entrants is high or low.
(b) Identify the power of supplies. Discuss whether the power ofsupplies is high or low (1-e) Identify the power of buyers. Discusswhether the power of buyer is high or low (1-g) Identify the threatof substitutes.
(c) Discuss whether the threat of substitutes is high or low
(d) Identify the rivalry among competitors. Choose one of theconcepts (Competitive industry structure, Industry growth,Strategic commitments, Exit barriers) to discuss the intensity ofrivalry among competitors. And discuss whether the intensity ofrivalry among competitors is high or low.

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Porters five forces model helps to identify five competitive forces that determine a firms strengths and weaknesses These forces help to analyse the profitability of the firm and the industry The five forces that affect the competitiveness and profitability of a firm included in this model are Impact of new entrants into the industry Competition in the Industry Power of suppliers Power of buyers Threat of substitutes Impact of technology shifts on the textbook industry can also be analysed using these five forces of the Porters five forces model a Threat of new entrants The easier it is for new entrants to enter into the market the more is the risk for existing firms of losing their market power If an industry has huge barriers to entry like their are huge capital costs involved in entering an industry or the existing firm enjoys economies of scale then it will be difficult for the new firm to enter the industry and hence the existing firm will retain its market power In the textbook publishing firms there is huge capital cost involved in establishing the firm and the firms usually enjoy economies of scale as producing first few units is very costly while the average costs keep See Answer

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