Given the Industry Structure in the Automobile Business, Entering the Auto

question 98

Multiple Choice

Given the industry structure in the automobile business, entering the auto manufacturing industry doesn't seem advisable.Yet Tesla Motors is joining the fray.Rather than attempting to compete head-on in internal combustion engines, Tesla Motors is entering the all-electric car segment, a much less crowded niche in the overall car industry.Which of the following is Tesla most hoping to benefit from in this market niche?

• A) Network effects
• B) Economies of scale
• C) Customer switching costs
• D) Capital requirements

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Definitions:

Purchase

The action of acquiring ownership of goods or services through the exchange of money or other forms of payment.

Security

A financial instrument representing an investment in stocks, bonds, or any other financial asset that provides ownership or debt rights to holders.

Initial Public Offerings

The first sale of stock by a private company to the public, often referred to as going public.

Secondary Market

The secondary market is where previously issued securities and financial instruments, such as stocks and bonds, are bought and sold, unlike the primary market where securities are first issued.