Question

Marcel, the owner and president of a three-star hotel, believes that only competitors within the same strategic group need to be analyzed. Nina, the chief of client services, believes that other groups must also be considered in order to stay ahead of competition. Which of the following situations strengthens Nina's argument?

Answer 1

Nina's argument can be strengthened by considering the concept of monopolistic competition and the potential entry of new firms in the market.

Step-by-step explanation:

Nina's argument can be strengthened by considering the concept of monopolistic competition and the potential entry of new firms in the market. If a monopolistic competitor earns positive economic profits, it is likely that other firms will be tempted to enter the market. For example, a successful restaurant with a unique barbecue sauce may face competition from other restaurants trying to copy the sauce or offer their own unique recipes. This shows that analyzing competitors beyond the same strategic group is important to stay ahead of competition.