To Be Successful and to Survive the Shakeout Stage of the Industry

question 65

Multiple Choice

To be successful and to survive the shakeout stage of the industry life cycle, a firm should

• A) charge higher prices than its competitors.
• B) focus on product innovation rather than process innovation.
• C) gain economies of scale.
• D) shift from price to non-price competition.

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Definitions:

Default Probability

The likelihood that a debtor will fail to make required payments on their debt.

Monthly Interest Rate

The interest rate that is applied on a monthly basis to the principal of a loan or mortgage to calculate the monthly interest payment.

Net Present Value

A valuation method that calculates the present value of an investment's expected cash flows, minus the initial investment cost.

Monthly Interest Rate

The percentage of interest that is charged or earned on a loan or investment over a month's time period.