Why is the phase after the growth stage of the industry life cycle referred to as the shakeout stage?
A) The barriers to entry increase during this stage.
B) The firms in the industry yield the highest profits during this phase.
C) Rivalry among competitors decreases in this stage.
D) The weaker firms are forced out of the industry in this stage.

Question

Quizplus · Accepted Answer

In the shakeout stage, as rivals vie for a shrinking pie and competitive intensity is increasing, the weaker firms are forced out of the industry. This is the reason why this phase of the industry life cycle is called the shakeout stage.

Why Is the Phase After the Growth Stage of the Industry