CA Inter P6 · Chapter 11 · Question 7 of 11
Rivalry among existing competitors tends to be MOST intense when:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Industry growth is slow, competitors are of similar size, fixed costs are high and exit barriers are high
Explanation
Rivalry intensifies when firms must fight for market share because growth is slow, when many equally balanced competitors exist, when high fixed costs push firms to fill capacity by cutting prices, and when high exit barriers keep weak firms in the industry. Rapid growth, a clear leader and strong differentiation all tend to reduce rivalry.
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