Question

Which of the following might affect an optimal exit strategy for a firm in a dying industry?

I. The number of competitors
II. Industry capacity
Ill. How fast the demand is expected to decrease
IV. What fraction of each firm's business does the dying product account for.
Options:-
A. I only
B. land ill
C. Ill only
E. Il. Ill and IV
F. ll and IV
G. None of the above.
H. All of them.

Answer 1

The optimal exit strategy for a firm in a dying industry can be affected by factors such as the number of competitors, industry capacity, the expected decrease in demand, and the fraction of business accounted for by the dying product. So, the correct option is E. II, III and IV.

Step-by-step explanation:

The optimal exit strategy for a firm in a dying industry can be affected by several factors. These factors include:

1. The number of competitors - If there are a large number of competitors, it may be more difficult for a firm to exit the industry as it will face stiff competition in finding alternative markets.
2. Industry capacity - If the industry has high capacity, it may be more challenging for a firm to exit as there may be excess production capacity that needs to be absorbed by the remaining firms.
3. How fast the demand is expected to decrease - If the demand for the product is expected to decrease rapidly, the firm may need to exit the industry quickly before it becomes unprofitable to continue operations.
4. What fraction of each firm's business does the dying product account for - If the dying product accounts for a significant portion of a firm's business, it may be more difficult for the firm to exit as it will need to find alternative revenue streams.

So, the correct option is E. II, III and IV.