CFA Level I · CFA Level I Exam · Industry and Competitive Analysis
Which limitation of industry life cycle analysis is most accurate?
Stage durations vary and technology or regulation can shift an industry between stages. The life cycle is a generalization, not a fixed timetable. Innovation can rejuvenate a mature industry, so analysts cannot assume a uniform sequence or timing.
- AIt cannot be applied to any industry that has more than one competitor
- BStage durations vary and technology or regulation can shift an industry between stagesCorrect
- CEvery industry follows the same fixed sequence over the same time period
Explanation
Life cycle models are generalizations; stage length varies and innovation, regulation or demand shifts can rejuvenate or alter an industry's path. Industries do not follow identical fixed timelines.
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