CFA Practice Question

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CFA Practice Question

According to McGahan and Porter, industry and competitive forces can act as ______ on a company's returns.

A. a floor
B. a ceiling
C. both a ceiling and a floor
Correct Answer: B

Industry and competitive forces can act as a ceiling on a company's returns by creating an environment of intense competition and limited profit potential. However, companies can still strive to achieve above-average performance through effective strategies and differentiation within the industry boundaries.

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