Question

68. 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

Which of the characteristics would be typical of an industry that is in the maturity stage?
A. 1, 2 and 3
B. 4 and 5
C. 6, 7 and 8
D. all characteristics fit the maturity stage

Answer 1

The characteristics indicative of an industry in the maturity stage are high market penetration and intense competition on price, which are encapsulated in B. 4 and 5 from the provided options. Globalization has influenced industry analysis by broadening competition. Yet, characteristics suggesting innovation and market expansion indicate the industry is not entirely in the maturity stage.

Step-by-step explanation:

The characteristics typical of an industry in the maturity stage are captured under the option B. 4 and 5 from the given choices. The maturity stage of an industry is often identified by a slowdown in sales growth since most potential customers have already purchased the product, deadlocked market penetration rates, and intense competition on price. Therefore, characteristics such as a high penetration rate in the domestic market (60% of households) and fierce competition on price, including common price wars, fit the maturity stage description.

Global markets play a role in how industries are analyzed, with globalization expanding competition beyond national borders. This has been evident in markets such as the auto industry, where traditional U.S. manufacturers now compete with international brands. This mirrors characteristic number 2, where U.S. manufacturers of the personal care gadget are seeking to enter non-U.S. markets.

Characteristic 3, involving direct sales to customers through mail order with high growth rate, and characteristic 6, where manufacturers develop new niches based on reputation, quality, and service, suggest that while the industry may be mature, there are still areas of innovation and market expansion. Therefore, we can conclude that not all characteristics fit the maturity stage, particularly those that suggest rapid growth or expansion into new markets or segments.