- 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
Which of the following characteristics is not representative of an industry that's in the maturity stage of its life cycle?
A. Competition is intense among the rivals within the industry.
B. There are a lot of companies from other industries entering into this particular industry.
C. Instead of product differentiation, price is the primary competitive weapon.
Explanation: As an industry matures, sales are either stagnant or growing slowly. This lack of industry sales growth forces companies to increase sales by stealing market share from each other, often using price to lure customers. These factors make the industry a very unattractive market for new competitors to enter into.
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