The level of industry demand:
A) has little effect on competition in the industry.
B) is one of the determinants of the intensity of rivalry in the industry.
C) increases when customers exit a marketplace.
D) does not impact the market share that established companies hold.
E) decreases the rivalry among established companies, when in decline.

Question

Quizplus · Accepted Answer

The level of industry demand is one of the determinants of the intensity of rivalry in the industry. When industry demand is high, there is usually high competition among firms to capture market share. Conversely, when industry demand is low, there is less competition among firms. A decrease in industry demand may lead to a decrease in overall profits, which can intensify rivalry among firms as they compete for a smaller pool of customers.

The Level of Industry Demand