Question

The smartphone market has been dominated by Apple, but recently the Droid has been able to leverage Google's information services into market gains, while Blackberry, known for its secure business-oriented network, has attempted to become more attractive with a "friendlier" interface. At the same time, a number of less capable fringe firms are emerging. Suppose an economist analyzes this industry as follows:

ECONOMIST: Each firm brings its own distinct capabilities to its product design, with each product design appealing to a different segment of the market. Apple is known for the aesthetics of its products; Google is known for its ability to manage information effectively; and Blackberry is known for its more secure data network. Each of these distinct capabilities is likely to be sustainable for some time and will be a source of competitive advantage for each. Fringe firms, on the other hand, do not appear to be able to replicate these capabilities; thus, they are more homogeneous and more likely to compete on price
True or False: This analysis is consistent with the industrial organization
a) True
b) False

Answer 1

Smartphone Market

Apple, Google, and Blackberry:

This analysis is consistent with the industrial organization model:

a) True

Step-by-step explanation:

Industrial organization is the application of the economic theory of price, the structure of markets, and the strategic moves by firms to industrial analysis. According to investopedia.com, "Industrial organization is a field of economics dealing with the strategic behavior of firms, regulatory policy, antitrust policy and market competition."

The industrial organization model is a way of explaining the forces outside an organization that exert influences on a firm's strategic actions. It is based on the assumptions that decision-makers act rationally, have mobile resources that they control, and that pressures and constraints are imposed by the external environment.