- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 40. Introduction to Industry and Company Analysis
- Subject 4. Principles of Strategic Analysis
CFA Practice Question
The elements of a thorough industry analysis are especially helpful in evaluating the following competitive forces: ______.
II. the bargaining power of customers
III. the bargaining power of suppliers
IV. the threat of new entrants
V. the intensity of rivalry
I. the threat of substitute products
II. the bargaining power of customers
III. the bargaining power of suppliers
IV. the threat of new entrants
V. the intensity of rivalry
Correct Answer: IV and V
These two forces are broadly applicable because all companies have competitors and must worry about new entrants to their industries.
User Contributed Comments 3
| User | Comment |
|---|---|
| Skrills | wouldn't threats of new entrants and intensity of rivalry also infer a threat of substitute products? |
| hoyleng | key word "thorough" industry analysis.. |
| johntan1979 | No, new entrants does not always mean substitutes and vice versa. Substitutes always means consumers can choose to eat beef instead of chicken. New entrants usually mean the same products, e.g. chicken, with different brand names. |