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Some venture capitalists believe that the chosen industry drives a firm’s profitability. Others believe that an...

Some venture capitalists believe that the chosen industry drives a firm’s profitability. Others believe that an effective management team can increase profits in any industry. Develop an argument to support either side.

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Answer #1

The notion that a chosen industry is what drives a firm’s profitability, over an effective management team being able to drive profits in any industry, really depends on how much a firm is able to allow for initial capital into any given industry. If a firm is very young and does not have a significant amount of capital to lose on a potential failure, that firm would be much better off staying within their chosen industry until they are able to set aside investment capital. Similar to how a person should never use gambling as a way to make money, but rather go into a game of chance knowing about the possibility that you are not going to walk out with the money you walked in with.

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