The threat of direct competition tends to be high when
A)there are few firms in an industry and these firms tend to be unequal in size.
B)the industry growth rate is high.
C)firms are unable to differentiate their products.
D)production capacity can be added in small increments.

Question

Quizplus · Accepted Answer

When firms are unable to differentiate their products, they offer similar products to customers, leading to direct competition. In contrast, when firms are able to differentiate their products, they offer unique benefits and features, making it more difficult for competitors to directly compete. Therefore, the threat of direct competition tends to be high when firms are unable to differentiate their products.

The Threat of Direct Competition Tends to Be High When