Week 6 Reading Reflection

               Week 6 Reading Reflection

The biggest surprise for me was the fact that someone or company finally realized how important every single customer is.  They talked about how smart customers could affect your prices by pitting you against your rivals.

 

I guess the most confusing part of the reading to me in this article was aimed at new entrants into the market. I’m not sure why escalating your R&D expenditures would keep the competition from entering the market.

              

The first question I would ask the author is if the average ROIC in the U.S. is 14.9% why would you go into a business that has much lower ROIC than the average.

The other question would be why is the ROIC so much lower for the businesses under that average threshold? What is the main cause of such low ROIC’s? Is there fierce competition or are the margins just too low?

I didn’t really disagree with the author on the article, but I still do not understand why higher cost in the R&D would keep the new entrants out unless it is too costly for someone else to try to break into the same market and competing with someone who already has an established customer base.