- CFA Exams
- CFA Exam: Level I 2021
- Study Session 13. Equity Investments (2)
- Reading 40. Introduction to Industry and Company Analysis
- Subject 4. Principles of Strategic Analysis
CFA Practice Question
According to the industry life cycle analysis, ______
B. mature industries tend to be more competitive than new industries.
C. very profitable companies can exist in an industry with below-average profitability.
A. all companies in an industry will have similar performance.
B. mature industries tend to be more competitive than new industries.
C. very profitable companies can exist in an industry with below-average profitability.
Correct Answer: C
A: Some companies may follow a different pattern.
B: The opposite is generally true.
User Contributed Comments 8
| User | Comment |
|---|---|
| johntan1979 | How is C possible? One or two big players, with many others with tiny market shares? |
| bidisha | think how toyota did in the US for C. |
| gill15 | I think B is true...New industry in the Embryonic stage has NO competition....that the mature phase must have more competition then that... |
| jejasin | I had the same thinking as Gill...this section is tricky |
| Corey678 | @gill15 I thought by "new" they fused Embryonic and Growth stages together. While I think Embryonic stage has little competition; in the Growth stage the level of competition ramps up more so than mature industries where barriers of entry rises. |
| merc5559 | @Corey678 Growth stage has low competition... |
| renataa | yeah, you are right Merc5559. But what is think is that the competition is not high for New and Mature industries, but the I guess the mature industry has lower of two because the creation of barriers.. But it is - ''I want you to fail'' question... |
| khalifa92 | C means that very profitable companies can exist in highly competitive phase/industry. |