Always Round Tire has been in the tire business since 1963. They have several plants with different levels of technology. They are organized by the United Rubber Workers union. Over the years, the company has worked with its employees to figure out how to produce a tire for less. This incumbent advantage over potential newcomers is the:
A) result of scale economies.
B) impact of licenses and patents.
C) clear threat of using its excess capacity.
D) effect of its learning curve.

Question

Quizplus · Accepted Answer

The incumbent advantage that Always Round Tire has over potential newcomers is the effect of its learning curve. Over the years, the company has worked with its employees to figure out how to produce a tire for less, which means they have gained knowledge and experience in the tire-making process. This experience gives them an advantage in terms of efficiency and cost-effectiveness, making it difficult for potential newcomers to compete with them.

Always Round Tire Has Been in the Tire Business Since