The Five Competitive Forces Model When Used Collectively Determines an Industry's

question 18

True/False

The five competitive forces model when used collectively determines an industry's long-term attractiveness regarding: rivalry among present competitors; threat of new entrants into the industry; the bargaining power of suppliers; the bargaining power of buyers; and the threat of substitute products.

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Definitions:

Net Present Value

is a method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and outflows.

Credit Sale

A transaction where the buyer is allowed to pay for goods or services at a later date, as opposed to paying at the time of sale.

Monthly Interest Rate

The interest rate applied to a loan or investment, calculated to reflect the monthly compounding period.

Variable Cost

Costs that vary directly with the level of production or sales, such as materials and labor.