Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit

May Examination Period 2021
ECN302 Corporate Strategy
Duration: 3 hours
Answer ALL questions in Section A and THREE questions in
Section B. Section A carries 40 marks and Section B carries 60
marks.
If you answer more questions than specified, only the first answers (up to the
specified number) will be marked. Delete any answers that you do not wish to be
marked. The final submission on QMplus is the version that will be marked.
This examination paper MUST NOT be shared with anyone else. Doing so will be considered a
very serious assessment offence under the Queen Mary Academic Misconduct Policy.
This examination is an individual assessment and must be entirely your own work. All work will be
run through the plagiarism software, Turnitin. The software will also compare your script against all
other student submissions. Any evidence of plagiarism or collusion will be taken forward as
academic misconduct.
Calculators are permitted in this examination.
Please ensure that your working is clearly shown with all steps of your calculation included in your
answer document, including any formula used.
When writing formulas, please note the following:
 It is acceptable to use the standard alphabet rather than Greek letters. The following are
recommended: m for , s for , w for , r for , d for , b for 
 For mathematical operators: add +, subtract -, multiply *, and divide /
 Where appropriate, use an underscore to indicate a subscript, Eg r_f for rf
 Use the ^ character for power, eg x^2 for x2, x^0.5 for √x
 As an alternative to x^.5 you may type sqrt(x).
 Use brackets as necessary. To make your answer clearer use different brackets where appropriate, eg
[] {} ()
Section A. Answer ALL questions.
Please read the case study on the mobile gaming company Zynga on pages 5 and 6, and
the information below.
Figure 1. Revenues for the gaming industry 2015 – 2020, by segment. Source:
Statista.com (2021)
Question 1.
a. Use the Five Forces Framework (Porter, 1980) to assess the main sources of
competitive pressures in the gaming industry.
[15 marks]
b. Given this, explain Zynga’s corporate strategy in terms of where and how they are
competing. Does Zynga have a competitive advantage? Explain your answer.
[10 marks]
Question 2.
There is a potential entrant, E, with the technical capabilities to enter the global gaming
industry. As a corporate strategist advising the firm on how to enter the market, explain to
Firm E (i) which segment should they enter and why, and (ii) what threats they should
expect to face on entry. Given this, determine an entry strategy for Firm E or explain why
Firm E should not enter the industry.
[15 marks]
Section B. Answer THREE questions. All questions carry 20 marks.
Question 3.
a. “In an industry with firm asymmetries and high buyer concentration internal rivalry will
be strong.” Is this statement true or false? Explain your answer.
[5 marks]
b. In an industry with low concentration and weak horizontal differentiation, will firms follow
a share strategy or a margin strategy? Briefly explain your answer.
[4 marks]
c. A large firm with a competitive advantage in the domestic market is contemplating
expansion to enter a foreign market. The firm produces a product which is not tradeable.
Explain the key entry considerations for the firm and a strategy for how the firm can enter
the foreign market.
[6 marks]
d. If the large firm successfully enters the foreign market, how will this affect the
competitive pressures in the foreign market?
[5 marks]
Question 4.
a. For a firm following a cost leadership strategy, what is the difference between benefit
proximity and benefit parity? Explain how a firm could achieve benefit parity.
[5 marks]
b. How does reputation and buyer uncertainty provide a firm with an early mover
advantage? Briefly explain if this is more important for the producers of an experience
good or a search good.
[5 marks]
c. There are 5 firms competing in the market for cement. The product is homogeneous.
The marginal cost of each firm is 20. Weekly demand is given by P = 580 – Q, where P is
price and Q is quantity.
(i) Once prices are set in this market, they cannot be changed. Customers will choose
the lowest price product. What price will the five firms charge and why?
(ii) Now assume that firms make pricing decisions on a weekly basis and have a weekly
discount rate of 0.2%. The current market price is 120 but firm 1 wants to increase its
price to the monopoly price. Explain if firms 2, 3, 4 and 5 will follow suit. What if there
are 30 firms producing the same good? Explain your answer.
(iii) If the five firms sell to different construction companies and do not publically
disclose their prices, how will this affect the sustainability of cooperative pricing
between the five cement manufacturers? Why?
[10 marks]
Question 5.
a. “Brand proliferation is only a credible entry deterrence threat if producers set a limit
price.” Is the statement true or false? Explain your answer.
[6 marks]
b. Consider an industry consisting of an incumbent (M) and an entrant (E). Each year,
market demand for this industry is given by P = 800 – (qM + qE), where P is price and q is
quantity. The incumbent firm faces costs of CM(qM) = 280(qM). The potential entrant faces
costs of CE(qE) = 280(qE) + F, where F is the fixed cost of entry.
(i) Under what conditions would entry be blockaded? What does this imply for the
incumbent and the entrant?
(ii) If the entrant has fixed costs of entry, F = £8,000, explain the incumbent firm’s
optimal strategy in response to the threat of entry. What level of capacity should M
pre-install?
[14 marks]
Question 6.
a. “A firm can only be a multi-sided platforms if it is vertically integrated.” Is this statement
true or false? Explain your answer and give an example of a multi-sided platform.
[6 marks]
b. A monopolist (M) has the technology to expand production to a second good (Y). It has
the choice of expanding production of its current product (X), switching production to the
second good (Y), or producing both goods. The cost of the investment to expand
production of good X is £150,000 per annum, or for an additional £60,000 per annum the
firm can make both goods. The £60,000 per annum additional investment to make goods
X and Y is only available if the firm has first paid the £150,000 to expand production of X.
If the firm chooses to produce only good Y, the investment cost is £80,000 per annum.
The cost of producing X is £1.20 per unit and the cost of producing Y is £1.60 per unit.
If the expected quantity of X and Y per year are 100,000 and 250,000 respectively, should
M produce both goods? Briefly explain your answer.
[3 marks]
c. The two goods, X and Y, are complements. If M expands production to both goods,
explain how this will affect the price M charges for good X.
[5 marks]
d. M has the option to enter an exclusive contract with Firm A for the production of good X;
this will require additional investment for specialist equipment. The cost of the specialist
equipment will be covered by a loan with annual payments of £450,000. Firm A has
agreed to pay a price of £11.50 per unit for the specialist units of X. If M cannot sell these
to A, it will sell to the other firms in the market at a price of £5.50 per unit. Will M agree to
the exclusive contract? Explain your answer.
[6 marks]