A C, A, C C B
Industry Analysis 1-A 2-C, A, C 3-B 4-B
11/14 correct. But I beg to differ on this ‘Pioneer’ as the answer So a Pioneer is a one who has 1. ‘developed several years ago’ 2. ‘now operating smoothly’ 3. ‘few flaws in the system time-to-time’ 4. ‘aggressively marketing its products’ 5. ‘able to earn a small profit’ Anybody else thinks it should be either A or B but ‘no-way-not-C-at-all’?
banni, SSS - can you explain your intuitions abt 2P1 answer?
the reason i said pioneering is because the firm is introducing a new type of product to an untapped market, it’s barely scraping by, low profit margins, etc. but now that i read over it, it might actually be growth and not pioneering - because it “has been a couple of years,” it’s “now operating smoothly” and their earnings are accelerating “just made a profit for the first time”
That’s the beauty of these subjective questions - u never know until you get the results in hand. 
yeah i thought growth as well. seems like it’s passed pioneering.
pioneer, accelerating growth, mature growth, stabilization, decline PAMSD Please Accept My Stupid Deficiency
So who went to Harvard and took competitive strategy with Porter himself?
operating smoothly but there are a few flaws in the system able to earn a small profit it is kind of subjective and i could see where growth would be tempting, but growth stage is more above industry profits, where stuff is really taking off for a company. turning a small profit and the first product still with system flaws didn’t really sound like business was booming. but i would agree that this would be the latter part of pioneer heading (hopefully) towards growth. i just reviewed the IPS section of PM and same thing- did a bunch of “average” or “above average” ability for risk questions- got lots wrong. i think risk a year ago looks a lot different than risk today! i can’t think of that many q’s on actual CFAI tests I’ve taken (save ethics which i find grey a lot) that are vague- they usually are pretty good about making the point clear.
> i just reviewed the IPS section of PM and same > thing- did a bunch of “average” or “above average” > ability for risk questions- got lots wrong. i > think risk a year ago looks a lot different than > risk today! i can’t think of that many q’s on > actual CFAI tests I’ve taken (save ethics which i > find grey a lot) that are vague- they usually are > pretty good about making the point clear. Those questions were total crap. I’ll be very angry if something like that shows up on exam day!
Got 12 out of 14 correct… and i also though it was growth stage…poineering means the company is still fine tuning the product and has not made it commercial yet…thats what i remember from Level 1…but i guess CFAI is always correct!!!
An industry that manufactures and sells a commodity-like product will face increased competition primarily because of greater: A) threat of substitute products. B) bargaining power of buyers. C) threat of new entrants. The correct answer was A. Substitute products limit the profit potential of an industry. Why? They limit the prices firms can charge. There will be higher levels of competition and lower profit margins for more commodity-like products. I don’t quite understand this…I actually chose B because I am under the idea that a “commmodity-like” product has little or no differentiation, therefore people are very price sensitive. hmmm.
Both are correct. But the substitute product is a better argument for increased competition (think pure competition with no differentiated products).
Because ‘comodity-like’ products have very low switching cost. You can very easily switch from using Advil to Tylenol (ok … a bad example)? So if a Advil 24 pill pack (25mg) is priced at $8 per bottle then the Tylenol wold have to be round about the same price for a 25mg concentration Acetaminophen else if it was sold for $5, you could switch there as a substitute for fever-reducer.
swaptiongamma Wrote: ------------------------------------------------------- > Because ‘comodity-like’ products have very low > switching cost. You can very easily switch from > using Advil to Tylenol (ok … a bad example)? So > if a Advil 24 pill pack (25mg) is priced at $8 per > bottle then the Tylenol wold have to be round > about the same price for a 25mg concentration > Acetaminophen else if it was sold for $5, you > could switch there as a substitute for > fever-reducer. ehh. isn’t this an example of price sensitivity also?
Think of two gas stations on the same corner. Both sell the commodity like product of fuel. The buyer really doesn’t have any pull on the price, but both gas stations will be extremely competative since a marginal price change will usually sway customers one way or another.
The end-users propensity to switch is determined by the switching-cost they have to bear to make the switch. So it’s more the scare of users flocking to substitute products, that they want to keep the price in the acceptable band range.
I think I get it now… the threat of substitutes is the better answer because of the fact that there is very little or no differentiation. i was thinking along the lines of mineral water being a substitute for coffee, instead of starbucks versus the coffee bean.