A. Describe the overall explanatory power of this regression model, as well as the relative importance of each continuous variable. B. Based on the importance of the binary or dummy variable that indicates superstore competition, do superstores pose a serious threat to Columbia’s profitability? C. What factors might Columbia consider in developing an effective competitive strategy to combat the superstore influence? Demonstrating the tools and techniques of market structure analysis is made difficult by the fact that firm competitive strategy is largely based upon proprietary data. Firms jealously guard price, market share and profit information for individual markets. Nobody should expect Target, for example, to disclose profit and loss statements for various regional markets or on a store-by-store basis. Competitors like Wal-Mart would love to have such information available; it would provide a ready guide for their own profitable market entry and store expansion decisions. To see the process that might be undertaken to develop a better understanding of product demand conditions, consider the hypothetical example of Columbia Drugstores, Inc., based in Seattle, Washington. Assume Columbia operates a chain of 30 drugstores in the Pacific Northwest. During recent years, the company has become increasingly concerned with the long-run implications of competition from a new type of competitor, the so-called superstore. To measure the effects of superstore competition on curr
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