Question

The intensity of competition is greater in declining industries in which: a. the product is easy to differentiate. b. exit barriers are high. c. technology is stable. d. the industry is declining slowly instead of rapidly. e. entry barriers are high.

Answer 1

Answer:

b. exit barriers are high

Explanation:

Declining industries are those industries wherein the industry has saturated and experiences a negative growth. The characteristic of such industries being the products are lesser in demand.

For instance, cassettes and magnetic tapes industry was in demand until the arrival of more advanced forms such as compact discs and usbs, post which those industries turned into declining industries.

A declining industry with high barriers to exit would experience a greater competition since the barriers would encourage competition instead of withdrawal. And with higher costs of withdrawal, the firms continue producing at negative growth.