BUSINESS ADMINISTRATION
STRATEGIC MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Barriers to entry will rise
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Competitive rivalry will intensify
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Industry profits will increase
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Industry capacity will fall
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Detailed explanation-1: -New competitors entering the marketplace can either threaten or decrease the market share and profitability of existing competitors and may result in changes to existing product quality or price levels.
Detailed explanation-2: -The intensity of rivalry will be high if industry growth is slow. If the industry’s fixed costs are high, then competitive rivalry will be intense. Additionally, rivalry will be intense if the industry’s products are undifferentiated or are commodities.
Detailed explanation-3: -Costs that could increase rivalry include high fixed costs, high storage expenses, and low switching costs. High fixed costs will encourage firms to lower their prices. However, once the prices decrease, the competition will intensify.