Competitive Pressures Stemming from the Threat of Entry Are Weaker

question 20

Multiple Choice

Competitive pressures stemming from the threat of entry are weaker when:

• A) the incumbents do not enjoy preferential access to distribution channels (e.g. ,securing adequate space on retailer shelves).
• B) strong network effects exist.
• C) the industry outlook is risky or uncertain.
• D) incumbent firms have little ability to leverage distributors,dealers,and/or retailers to retain their business.
• E) the nature of the industry entails few scale economies.

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Definitions:

Average Cost

The cost per unit of output, calculated by dividing total costs by the total quantity of output produced.

Ovens

Cookery appliances designed for baking, roasting, and heating food through the application of direct or indirect heat.

Economies of Scope

Cost advantages that enterprises obtain through diversification and the production of a variety of goods rather than specializing in a single product.

Multiproduct Firms

Companies that produce and sell more than one product or service, often benefiting from economies of scope.