According to Porter's Five Competitive Forces Model, Which Kinds of Products

question 235

Multiple Choice

According to Porter's Five Competitive Forces Model, which kinds of products are most likely to limit the ability of firms in an industry to raise prices?

• A)differentiated products that target a small subsegment of the industry
• B)substitutable products produced by firms in different industries
• C)similar products produced by similar industries in low-cost countries
• D)complementary products produced by different firms in the same industry

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Definitions:

Book Value

The net value of a company's assets minus its liabilities, as recorded on the balance sheet.

Operating Costs

Expenses associated with the day-to-day operations of a business, including rent, utilities, payroll, and raw materials.

Useful Life

The estimated period that an asset is expected to be usable for its intended purpose, impacting depreciation calculations.

Variable Cost Concept

The principle that costs vary in proportion to the level of production or activity. These costs increase as production increases and decrease as production decreases.