ACCA Strategic Professional · Strategic Business Leader · Competitive forces

Brindle Foods sells a novel plant-based snack in a newly created market. Few customers know the product, production volumes are small, unit costs are high and the company is making losses. Using the industry life cycle and Porter's five forces, what is the most likely assessment of rivalry and entry threat?

In the introduction stage rivalry is typically low because few firms compete and the emphasis is on creating demand. However, if early results show the market is attractive, entry threat rises. Price competition and saturation are features of mature markets, not new ones.

1. ARivalry is low because few competitors exist, but the threat of entry may rise if early demand proves profitableCorrect
2. BRivalry is intense because price competition dominates in introduction stages
3. CEntry threat is nil because losses deter all new competitors permanently
4. DBuyer power is highest because the market is saturated