Question

Which of the following profiles would best describe an industry having a Mixture of Cost Leadership and Product Differentiationstrategies as being optimal because firms in the industry have pricing power? Assume all factors are equally important. (Palepu)

	a.	Low Industry Concentration, Low Distribution Access for new entrants, High Switching Costs for Customers of firms in the industry to find new suppliers
	b.	Low Industry Concentration, High Fixed-Variable Cost Ratio, Low product differentiation
	c.	Few Exit Barriers, High First Mover Advantage, High Product Differentiation
	d.	Supply > Demand, Few Legal Barriers to Entry, Low Industry Concentration

Answer 1

Ans :- option A is correct. as stated in question, firms in industry have pricing power. Therefore it implies that there are few Firms in market and its called oligopoly. This kind of Market scenarios are found in capital intensive sectors such as telecom, Defense sector etc. in this type of markets, there are few participants i.e. low industry concentration.entry of new entrants are not easy. switching cost of customer is high as there are few participannts.