(a) The stage of industry's development (life cycle) cannot influence the nature of competitive rivalry.
(b) As the industry starts to mature in terms of life cycle, rules are rejected, consumer expectations about quality and performance are blurred and industry standards are put for modification.
(c) A major feature of maturing industries is the tendency for competition based on product pricing becoming similar.
(d) In declining industries, only the most efficient firms can earn reasonable profits.
In the light of Industry Life Cycle, which of the above statements are true ?
Codes :
Industry Life Cycle Statement Analysis
This analysis evaluates the given statements regarding the Industry Life Cycle stages and competitive dynamics.
Statement (a) Analysis
Statement: The stage of industry's development (life cycle) cannot influence the nature of competitive rivalry.
Truth Value: False.
Reasoning: The industry life cycle stage fundamentally influences competitive rivalry. For example, rivalry intensifies differently in growth versus maturity phases.
Statement (b) Analysis
Statement: As the industry starts to mature in terms of life cycle, rules are rejected, consumer expectations about quality and performance are blurred and industry standards are put for modification.
Truth Value: False.
Reasoning: Maturity typically sees established industry standards and clearer consumer expectations focused on refinement. Standardization, not modification of core standards, is characteristic.
Statement (c) Analysis
Statement: A major feature of maturing industries is the tendency for competition based on product pricing becoming similar.
Truth Value: True.
Reasoning: In mature industries, products often become standardized. This leads to increased competition focused on price as firms aim to retain market share.
Statement (d) Analysis
Statement: In declining industries, only the most efficient firms can earn reasonable profits.
Truth Value: True.
Reasoning: Declining demand in these industries intensifies price competition. Profitability is often limited to firms with superior cost structures and efficiency.
Conclusion on True Statements
Statements (c) and (d) accurately describe characteristics of the Industry Life Cycle's maturity and decline stages, respectively.
Therefore, only statements (c) and (d) are true.
Important Questions from Business Competition
- Choose the correct section of the Competition Act, 2002 Which provides that 'No enterprise shall abuse its dominant position' :
- The remedies for the violation of Sections 3 and 4 of the Competition Act have been laid down under
Select the correct code of the following statements being correct or incorrect.
Statement (I) : The ‘law of one price’ states that in competitive markets free of transportation costs and barriers to trade, identical products sold in different countries must sell for the same price when their price is expressed in terms of the same currency.
Statement (II) : An ‘Efficient market’ has no impediments to the free flow of goods and services, such as trade barriers.
The market share data for an industry, comprising five companies, is given below :
Company Market Share (%) A 35 B 25 C 18 D 12 E 10 This industry’s three-firms Herfindahl-Hirschman index shall be :
Match the items of List-I with the items of List-II and find the correct combination:
List - I
(Market Structure)List - II
(Nature of industry where prevalent)(a) Perfect competition (i) Aluminium and passenger cars (b) Oligopoly (ii) Public utilities like Telephones and Electricity (c) Monopoly (iii) Manufacturing : T.V. Sets, Refrigerators (d) Monopolistic competition (iv) Farm Products : Grains
