The prospect for the long-term profitability of an existing firm is greater when
Answer(s): A
The prospects of long-term profitability are contingent upon the industry's exit and entry barriers. The entry of new firms in market decreases the prospect for long-term profitability. When a firm operates in an industry that has a steep learning curve, it ios more difficult for new firms to enter the market. Thus, the prospects of long-term profitability are greater for an existing firm.
Structural considerations affecting the threat of substitutes include all of the following except
Answer(s): B
Substitutes are types of goods and services that serve the same purpose. All products that can replace a good or service should be considered substitutes. For example, bicycles and cars are substitutes for public transportation. Structural considerations determine the effect substitutes have on one another. However, because substitutes affecting the threat of substitutes.
Logistics Corp. is performing research to determine the feasibility of entering the truck rental industry. The decision to enter the market is most likely to be deterred if
Answer(s): C
When purchasing power is concentrated in a few buyers or when buyers are well organized, their bargaining power is greater. This effect is reinforced when sellers are in capital-intensive industry such as trucking.
Which industry factor does not contribute to competitive rivalry?
If it is expensive to switch suppliers, customers will be less motivated to respond competitor advances.
Which condition does not increase the threat of new competitor entry into the industry?
Answer(s): D
Strong brand identity decreases the new competitors will enter an industry. New competitors have difficulty because potential customers are loyal to established firms in the industry.
Post your Comments and Discuss Financial CMA exam prep with other Community members: