Question

An industry analysis for manufacturers of a small personal care gadget observed the following characteristics:

1. Industry sales have grown at 15-20% per year in recent years are expected to grow at 10-15% per year over the next three years, still well above the economic growth rate.
2. Some U.S. manufacturers are attempting to enter fast growing non-U.S. markets, which remain largely unexploited.
3. Some manufacturers have created a new niche in the industry by selling directly to customers through mail order. Sales for this industry segment are growing at 40% per year.
4. The current penetration rate in the U.S. is 60% of households and will be difficult to increase.
5. Manufacturers compete fiercely on the basis of price, and price wars within the industry are common.
6. Some manufacturers are able to develop new, unexploited niche markets in the U.S. based on company reputation, quality, and service.
7. Several manufacturers have recently merged, and it is expected that consolidation in the industry will increase.
8. New manufacturers continue to enter the market.

65. Characteristics 4 and 5 would indicate that the industry is in the _________ stage.
A. start-up
B. consolidation
C. maturity
D. relative decline

Answer 1

Has to be C. Maturity.

Step-by-step explanation:

Answer 2

The industry is in the maturity stage, characterized by slowed growth, market saturation, and competitive pressures that may lead to industry consolidation and the need for companies to innovate or expand globally.

Step-by-step explanation:

The characteristics mentioned, such as a 60% penetration rate in U.S. households and fierce competition on price, including common price wars, suggest that the industry is no longer expanding rapidly. Such characteristics indicate that the industry is in the maturity stage. This stage is characterized by slowing growth, saturated markets, and intense competition, often leading to consolidation as firms attempt to maintain market share and profitability. In the maturity stage, companies may seek to increase efficiency, develop new niche markets, or expand into untapped geographic regions to sustain their business.

Amid advances in technology and globalization, firms must navigate a complex environment. For example, economies of scale are small relative to the size of the market, and companies must leverage their brand name and reputation for quality and service to find new growth opportunities. As the market evolves, firms must also consider the implications of technological advancements and the push toward globalization that allow for broader competition and new market entrants, potentially leading to consolidation.