Issues in Index Construction
Index providers generally take a top-down approach to constructing a portfolio by defining:... Read More
An industry’s life-cycle position often has a large impact on its competitive dynamics, making this position an important component of the strategic analysis of an industry.
Life-Cycle Stages
- Embryonic: an industry just beginning to develop, characterized by slow growth, high prices, low volumes, a substantial need for investment, and a high risk of failure.
- Growth: characterized by rapidly increasing demand, improving profitability, falling prices, and relatively low competition (though a threat of new competitors is generally at its highest point in this stage).
- Shakeout: characterized by slowing growth, intense competition, declining profitability, and a focus on cost reduction.
- Mature: characterized by little or no growth, industry consolidation, and high barriers to entry.
- Decline: characterized by negative growth, excess capacity, and intense competition.
Limitations
Limitations
The evolution of an industry does not always follow a predictable pattern as various external factors (technological, regulatory, social, or demographic changes) may significantly affect the shape of the pattern. Also, the performance of companies within industries does not always mirror that of the overall industry as there can be successful companies in declining businesses and failing companies in high-growth industries.
Question
The newspaper industry has been shrinking for years in the shadow of the internet and 24-hour cable news networks. What is the life-cycle stage that best fits the newspaper industry?
- Mature.
- Decline.
- Shakeout.
Solution
The correct answer is B.
The newspaper industry has long ago moved past the shakeout stage and has more recently shifted into a period of decline against the increasing popularity of the internet.
Sergio Torrico
2021-07-23
Excelente para el FRM 2
Escribo esta revisión en español para los hispanohablantes, soy de Bolivia, y utilicé
AnalystPrep para dudas y consultas sobre mi preparación para el FRM nivel 2 (lo tomé una sola vez y aprobé muy bien), siempre tuve un soporte claro, directo y rápido, el material sale rápido cuando hay cambios en el temario de GARP, y los ejercicios y exámenes son muy útiles para practicar.
diana
2021-07-17
So helpful. I have been using the videos to prepare for the CFA Level II exam. The videos signpost the reading contents, explain the concepts and provide additional context for specific concepts.
The fun light-hearted analogies are also a welcome break to some very dry content.
I usually watch the videos before going into more in-depth reading and they are a good way to avoid being overwhelmed by the sheer volume of content when you look at the readings.
Kriti Dhawan
2021-07-16
A great curriculum provider. James sir explains the concept so well that rather than memorising it, you tend to intuitively understand and absorb them.
Thank you ! Grateful I saw this at the right time for my CFA prep.
nikhil kumar
2021-06-28
Very well explained and gives a great insight about topics in a very short time. Glad to have found Professor Forjan's lectures.
Marwan
2021-06-22
Great support throughout the course by the team, did not feel neglected
Benjamin anonymous
2021-05-10
I loved using AnalystPrep for FRM.
QBank is huge, videos are great.
Would recommend to a friend
Daniel Glyn
2021-03-24
I have finished my FRM1 thanks to AnalystPrep. And now using AnalystPrep for my FRM2 preparation. Professor Forjan is brilliant. He gives such good explanations and analogies. And more than anything makes learning fun. A big thank you to Analystprep and Professor Forjan. 5 stars all the way!
michael walshe
2021-03-18
Professor James' videos are excellent for understanding the underlying theories behind financial engineering / financial analysis. The AnalystPrep videos were better than any of the others that I searched through on YouTube for providing a clear explanation of some concepts, such as Portfolio theory, CAPM, and Arbitrage Pricing theory. Watching these cleared up many of the unclarities I had in my head. Highly recommended.