“Re: industry analysis in metals company new Posted by: sterling76 (IP Logged) [hide posts from this user] Date: June 9, 2008 01:36AM yeah, barriers, cyclical, diff prox. 2/3 for me” Why do you think its 2/3 for you?
cause I didn’t answer diff prox. - I put cost prox cuz I’m an idiot.
oh. I thought you put diff prox. you never know, may have twisted the question and cost may be right…
2/3 for me too here.
i put that the company was a mature company. i don’t even remember the question really. my reasoning was that they were starting to acquire smaller companies to help get them profitable again which is a property of mature companies. i feel that i read the question wrong or something. oh well
Thats what I did Guess its right!!!
I wish. I know it’s diff prox because they are the cost leaders.
Slash Wrote: ------------------------------------------------------- > i put that the company was a mature company. i > don’t even remember the question really. my > reasoning was that they were starting to acquire > smaller companies to help get them profitable > again which is a property of mature companies. i > feel that i read the question wrong or something. > oh well Exactly I thought the same… Since It had a decade of good revenues and was acquiring levelled companies… I put a growth or a mature there…
somebody said the question really said “all the above reasons EXCEPT”.
what was the question? i explicitly remember crossing out cyclical because it wasn’t asking for that (REACTION to business life cycle: cyclical, defensive). i think it was asking for what stage in the industry life cycle the firm was in (pioneer, growth, mature, decline)
I went for cyclical and remember I thought +1. Don’t remember exactly, I went to this section again after finishing all questions and scanned the entire vignette again and sticked to cyclical. Usually this is a good sign but you never know.
These questions are tricky. I put “Rivalry” as the rivals are fighting to keep up with the “cost leader”. The cost leader has an edge with economies of scale and weight/value etc. etc. More firms entering would be merely one more addition to the list of rivals.
I struggled with rivalry and new-entrants. Chose new-entrants. Three factors drove my choice: 1. geography made it more of a local business. 2. higher profits to larger companies and the given company was investing to get larger. 3. Herfindahl index value did not take into account the geography.
how many firms did you choose, and why? i had no idea.
Slash Wrote: ------------------------------------------------------- > what was the question? i explicitly remember > crossing out cyclical because it wasn’t asking for > that (REACTION to business life cycle: cyclical, > defensive). i think it was asking for what stage > in the industry life cycle the firm was in > (pioneer, growth, mature, decline) Agree Slash, I thought it was cyclical in the beginning too… Why did everyone pick cyclical when the question asked for the STAGE in the industry life cycle. Cyclical and defensive isn’t even a stage of the industry life cycle. (ever though that CFA would test you on that; to ensure that you know the difference between stage of the industry compared to business cycles) I picked mature; cause clearly cyclical isn’t even what they were ASKING, evethough it’s true and in the vingette. CFA usually does this, they always put those obvious answers there to side track you. Cause majority of the people would jump right to cyclical since they pratically TOLD you in the vingette without realizing they weren’t even asking that.
I don’t recall it about being a “stage”, what exam did you take whystudy? 6*** or 5***?
I also don’t think it was asking for the life cycle stage, but rather the industry classification.
whystudy Wrote: ------------------------------------------------------- > Why did everyone pick cyclical when the question > asked for the STAGE in the industry life cycle. > Cyclical and defensive isn’t even a stage of the > industry life cycle. (ever though that CFA would > test you on that; to ensure that you know the > difference between stage of the industry compared > to business cycles) > I picked mature; cause clearly cyclical isn’t even > what they were ASKING, evethough it’s true and in > the vingette. CFA usually does this, they always > put those obvious answers there to side track you. > Cause majority of the people would jump right to > cyclical since they pratically TOLD you in the > vingette without realizing they weren’t even > asking that. i’m relieved to see that someone else had the same reasoning. just to add, if they were asking for the “stage in the business cycle”, the choices would be expansion, peak, recession, recovery, etc. “cyclical” is a reaction to the current stage in the business cycle and not a stage itself.
i don’t remember which exam. but i am 100% certain I saw the word stage, which was the only reason why i picked mature. cause when I saw the 4 choices, I noticed it was 2 and 2 in terms of sub topic. that’s why I re-read the question. and it’s just the fact that they made it so obvious for you to choose cyclical, they had one sentence that told you. But you had to read almost the whole vignette to realize it’s in a mature industry.
Mature is probably wrong coz the text clearly mentions the profit of the whole industry is shrinking…and that is the sign of a declining industry.