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Question:

Archer Products is in an industry that has experienced low levels of price competition but recently excess capacity has led to aggressive price cutting. An analyst would be least likely to describe Archer’s industry as:

A in the maturity stage with high barriers to entry.
explanation

The maturity phase of an industry life cycle is not typically characterized by excess capacity or price competition. The conditions described may be consistent with a concentrated industry (typically characterized by low levels of price competition, since firms in the industry seek to avoid it) that is moving into the decline phase of an industry life cycle (excess capacity leads to aggressive price cutting, especially when barriers to exit are high). These conditions could also be consistent with an industry that is moving into the shakeout phase (characterized by developing excess capacity and intense price competition) following the growth phase (during which price competition is low).

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