CFA Level I · CFA Level I Exam · Industry and Competitive Analysis
A mature industry has consolidated to a few firms, growth equals that of the overall economy, and barriers to entry are high. Compared with the growth stage, profitability and pricing in this industry are most likely:
Profitability and pricing are most likely more stable. In a consolidated mature industry with high entry barriers, firms tend to avoid price wars and focus on cost control. Frequent entry and rapid capacity expansion belong to the growth or shakeout stages.
- Amore volatile because of frequent new entry
- Blower because rapid capacity expansion drives prices down
- Cmore stable as firms avoid price wars and focus on cost controlCorrect
Explanation
Mature industries with few firms and high entry barriers tend to have stable pricing and focus on cost efficiency. Frequent entry and rapid capacity expansion are growth or shakeout features.
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