CFA Level I · CFA Level I Exam · Industry and Competitive Analysis
A government introduces a stringent new emissions regulation that requires all producers in an industry to install costly equipment. Using an external-factor framework, this change is best described as a:
The emissions rule is best described as a political and regulatory external factor affecting industry costs. Government rules imposed on all producers raise required investment and operating costs and can raise entry barriers, rather than reflecting technology change or population trends.
- Atechnological factor affecting industry demand
- Bpolitical and regulatory factor affecting industry costsCorrect
- Cdemographic factor affecting industry demand
Explanation
Laws and regulations are political/legal external factors. Mandatory equipment raises costs and may lift barriers to entry. It is not a demographic or technological shift.
Did you get it right without looking?
One question tells you little. A timed set on Industry and Competitive Analysis shows your real accuracy, how long you take and where you lose marks.
More Industry and Competitive Analysis questions
- An analyst studies a premium watchmaker that charges prices well above the industry average. Customers value its brand heritage and craftsma…
- A regional cement industry has high fixed costs, slow demand growth, and products that buyers view as undifferentiated commodities. Which fo…
- A small software firm serves only dental clinics with specialized scheduling tools and charges higher prices than general software vendors. …
- A rapidly aging population in a country is most likely to benefit which industry's long-term demand?
- A company sells a basic product that is nearly identical to its rivals' products. It focuses on driving down its cost per unit through scale…
- Which characteristic is most likely associated with the shakeout stage of the industry life cycle?