Competitive intensity in a declining industry is greatest when
A) exit barriers are high.
B) the product has high differentiation.
C) the industry is declining slowly instead of rapidly
D) the industry cannot keep up with demand.
E) industry fixed costs are low.

Question

Quizplus · Accepted Answer

When exit barriers are high, firms find it difficult to leave the declining industry, increasing the level of competition among them. This is because firms continue to operate and fight for market share even when demand is shrinking, leading to overcapacity and price wars. High exit barriers can include long-term contracts, high fixed costs, or a high level of investment in specialized assets.

Competitive Intensity in a Declining Industry Is Greatest When