Business level Management

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Poter´s Generic

Business Strategies

Case study 3 HOT DOG VENDORS IN NYC

​The first vendor buys hot dogs at 20 cents each and buns at 8 cents each. Her hot dogs are known by locals to be of low quality, but some of them buy from her anyway, and she gets almost all of the drive-by business at a price of $1. Her average daily sales are 100 hot dogs.

Another vendor buys imported sausages. They cost him $2 each, and he buys a little better bun at 10 cents each. He sells an average of 40 sausages for $4 each. His nicer cart costs him $40 per day.

A third vendor buys a domestic sausage that is almost as good as the imported sausage and sell 80 per day at $3. She buys the sausages locally for $1 each, which is five times as much as the first vendor pays for cheap hot dogs but half the cost of the imported sausages. The better buns are 10 cents each, and the nicer cart is $40 per day