Question

What is rivalry among existing competitors?

Answer 1

Answer:

The correct answer is D.  high when competition is fierce in a market and low whencompetitors are more complacent.

Explanation:

The rivalry between existing competitors takes many known forms, including price discounts, new product improvements, advertising campaigns and service improvements. The degree of rivalry that lowers the profit potential of an industry depends, first, on the intensity with which companies compete and, second, on the basis on which they are competing. The intensity of the rivalry is greater if:

• The competitors are numerous or very similar in size and influence: in these cases, the rivals have difficulties to avoid interfering in their affairs;
• The growth of the industry is slow, so the fight for market share precipitates;
• Rivals are highly committed to the business and have leadership aspirations, especially if they have objectives that go beyond economic profitability in a given industry; For example, different units of large companies can participate in an industry for reasons of image or to offer a complete line of products.

The strength of the rivalry not only reflects the intensity of the competition, but also the basis on which it sits. The dimensions on which the competition occurs, as long as the rivals converge to compete in the same dimensions, exerts a great influence on profitability.

Rivalry is especially destructive to profitability if it tends only towards price, because price competitiveness transfers the benefits of an industry directly to its customers. Sustained price competition also teaches customers to pay less attention to the features and service offered by the product.