While Industry Forces Have Been Favorable for a Long Time

question 4

Multiple Choice

While industry forces have been favorable for a long time in the U.S.automotive industry,recent dynamics have lowered the profit potential of competing in this industry and thus reduced its attractiveness.The continued success of Tesla Motors in the industry will depend on other firm and industry factors.Which of the following represents one such factor that directly affects Tesla Motors?

• A) Since suppliers of its key sources are few, the bargaining power of suppliers is high.
• B) Since individual buyers do not have many choices, their bargaining power is low.
• C) There is a lack of balance in demand and supply, demand far exceeds capacity within the industry.
• D) There is a noticeable absence of complementary products and services for the industry.

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Definitions:

Actual Yearly Output

The total quantity of products or services produced by a company within a specific year.

Estimated Output

The projected quantity of goods or services a company plans to produce in a specific period.

Depreciable Cost

The total cost of a tangible asset minus its estimated salvage value, representing the amount that can be depreciated over the life of the asset.

Initial Cost

The original expense incurred to acquire an asset or start a project, including purchase price and any other initial expenses.