First, find a company that made a news headline in recent years for an action th
ID: 376917 • Letter: F
Question
First, find a company that made a news headline in recent years for an action that they had taken. These decisions should be related to one or more of the topics we have discussed throughout the quarter (decision-making over time, profit maximization, cost minimization, long-run adjustments, strategic interaction, etc.). Excellent sources include The Wall Street Journal, The Economist, The New York Times, CNN, etc. Begin by describing the news headline – what was the action being taken, who was taking it, and why was it considered newsworthy? A fun way to do this would be to find something related to an aspect of sports and entertainment that you are interested in.
Second, describe the firm you have identified, including a report concerning what they produce and what market they are in. Provide some analysis of the structure of that market – are they perfectly competitive, a monopolist, or somewhere in between? How do you know? If the firm produces many products in multiple different markets, focus on the market most relevant for the news headline you have chosen. Use the tools we’ve discussed in class and other evidence/analysis you can find to support your argument. Third, analyze the action taken in light of what we have discussed in class. Although we do not know all of the relevant circumstances and information underlying the decisions made by the company’s management team, use the information presented in the article and what else you can learn about the company - from statements and documents produced by the firm or other articles that you can find - to learn as much as you can. This analysis should include answers to the following questions: What was the motivation for the action, and did it appear to be successful? How does the action relate to a topic discussed in class? For example, was it an example of a firm exercising some price-setting power or strategy? Was it an example of a firm restructuring or reducing costs to increase competition? Was it a strategic move? Explain. Given what you’ve learned in class and what you’ve learned about the case, identify what you suspect to be the issues that the firm was likely to have been considering when making the decision to take the action being analyzed. Can you think of any strategic reason why the firm may have taken the action? Explain why these considerations would have been important.
Explanation / Answer
When google recast itself into alphabet, the headline on business insider was “Google will officially become 'Alphabet' today”
https://www.businessinsider.in/Google-will-officially-become-Alphabet-today/articleshow/49199114.cms
The action being taken was the creation of a holding company called Alphabet with different units so as to allow its different businesses to operate independently and move faster.
Google is the crown jewel in Alphabet’s holdings and it is a monopolist in a vast majority of the markets where it operates.
What was the motivation for the action, and did it appear to be successful?
The motivation for the action was to allow the different units to operate with greater independence and it’s been hugely successful with stock price having gained since the move was completed.
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