Just How Strong the Competitive Pressures Are from Substitute Products

question 111

Multiple Choice

Just how strong the competitive pressures are from substitute products depends on:

• A) whether the substitutes are strongly or weakly differentiated and whether the relative frequency of buyer purchases is high or low.
• B) whether attractively priced substitutes are readily available and the ease with which buyers can switch to substitutes.
• C) whether the available substitutes are products or services.
• D) whether the producers of substitutes have ample budgets for new product R&D.
• E) the speed with which buyer needs and expectations are changing.

---

Definitions:

Favorable Volume Variances

Differences between the expected volume of production or sales and the actual volume that lead to lower costs or higher profits than planned.

Production Capacity

The maximum output that an organization can produce in a given period under normal working conditions, considering available resources.

Work Stoppages

Occurrences when employees halt work, often due to labor disputes or strikes, affecting productivity and operations.

Direct Materials Price Variance

The difference between the actual cost of direct materials and the expected standard cost, indicating how well a company controls its material costs.