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As a potential investor for a new venture, you decide to look over the firm's pro forma financial statements to see if it is worth

As a potential investor for a new venture, you decide to look over the firm's pro forma financial statements to see if it is worth investing your money. You notice that the entrepreneurs have listed some revenue and cost figures based on three different potential scenarios.

Worst Probable Best

Units sold 300,000 500,000 1,000,000

Revenues 4,500,000 7,500,000 15,000,000

Total Costs 800,000 1,200,000 2,200,000

The entrepreneurs assure you that they are using the average cost structure that industry participants currently face and have included all costs and expenses in their calculations.

a) Do the above figures tell you anything about threat of new entrants? If so, what do they suggest and why?

b) Do the above figures tell you anything about the power of suppliers? If so, what do they suggest and why?

c) Do the above figures tell you anything about the degree of rivalry? If so, what do they suggest and why?

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