Session 11: Equity Valuation: Industry and Company Analysis in a Global Context Reading 39: The Five Competitive Forces that Shape Strategy
LOS c: Describe why industry growth rate, technology and innovation, government, and complementary products and services are fleeting factors rather than forces shaping industry structure.
Strawline, Inc. manufactures straws using a new technology which allows straws to be made with an 11% reduction in costs. According to Porter’s model, which of the following is most likely?
A) |
Any initial advantage will eventually be eliminated as competitors adopt the same technology. | |
B) |
Strawline’s increased profit margins will allow it to increase financial leverage. | |
C) |
Strawline’s increased profit margins will allow it to decrease financial leverage. | |
New technology does not offer a lasting advantage since the technology is available to all of Strawline’s current and potential competitors. |