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LOS b: Illustrate the life cycle of a typical industry.
Q1. Which of the following is a typical sequence in the industrial life cycle?
A) Pioneer, start-up, cash cow, growth.
B) Pioneer, growth, maturity, decline.
C) Start-up, cash cow, growth, maturity.
Q2. Life cycle phases in industry analysis are pioneer, growth:
A) mature, defensive.
B) defensive, decline.
C) mature, decline.
Q3. Samantha Cole teaches economics and finance at the Southwestern Central Wyoming College of Business. Her first class of the day is an economics primer for freshman. This morning, she is discussing industry analysis.
In her opening lecture, she lists the following factors that should be included in any industry-analysis model:
- Industry classification.
- Supply analysis.
- Demand analysis.
- International competition and markets review.
- External factor review.
Cole then asks her students for the characteristics of a mature industry. She gets four responses:
- Aaronson said, “Mature industries tend to have an overall growth rate slower than that of the overall economy.”
- Blisterman said, “The companies that generate the most growth in a mature industry are those selling to new markets.”
- Clendenning said, “Demand for the products made by a mature industry is usually starting to decrease.”
- Dresdler said, “Some companies in a mature industry may perform well during the weak parts of the business cycle.”
In the next portion of her class, Cole tells the students about two companies, Lightnight Corp. and Quicklag Inc.
Lightnight earned a profit margin higher than the industry average last year. The company also grew faster than the industry average, with sales growth of 9 percent and profit growth of 13 percent. The company gained market share at the expense of its competitors through a combination of innovative products and a superior cost structure that allowed for aggressive discounting of existing products.
Quicklag lost money last year. The company is very concerned about technological change. Quicklag counts on its marketing to differentiate itself from competitors. The company expects GDP to decline sharply next year but still plans to increase its spending on marketing and research. Salaries represent more than 60 percent of Quicklag’s total expenses.
Cole then asks the class to deduce the nature of the industries in which Lightnight and Quicklag operate.
Which of the following factors is least likely to affect the fortunes of an industry in the pioneer stage?
A) Demography.
B) Social change.
C) Government.
Q4. Which student’s statement about mature industries is most accurate?
A) Blisterman’s.
B) Aaronson’s.
C) Dresdler’s.
Q5. In what stages are the industries of Lightnight and Quicklag?
Lightnight's industry Quicklag's industry
A) Mature Pioneer
B) Growth Decline
C) Growth Pioneer
Q6. Movements of the business cycle are likely to have the greatest effect on a:
A) cyclical industry in the pioneer stage.
B) growth industry.
C) mature industry.
Q7. In her lecture on industry-analysis models, Cole left out which of the following factors?
A) Market-share comparison.
B) Financial-structure analysis.
C) Profitability analysis.
Q8. Assuming Quicklag has pricing power, which of the following is most likely to be a reason for that power?
A) Barriers to entry.
B) Product segmentation.
C) Input prices.
Q9. Darius Jackson was just hired as an entry-level analyst at Zinsser Securities. On his first day, investment director Marvin Campbell assigns Jackson the task of analyzing some companies and their industries. The first two companies Jackson must consider are Smith Co. and Jones Inc.
After a little research, Jackson has acquired the following information about Smith and Jones:
|
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Smith |
Jones |
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Profit growth |
Below industry average |
Above industry average |
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Acceptance of products |
High |
Moderate |
|
Demand for products |
Low |
Low |
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Profit margins |
High |
Low |
|
Performance during expansion |
Sales rise |
Sales rise |
After assessing the characteristics of the industries to which Smith and Jones belong, Jackson decides to prepare a supply-and-demand analysis for the industries. To that end, he e-mails a co-worker and longtime friend, Emily Stanton, a senior analyst at the firm. Jackson asks Stanton for Zinsser’s files on the relevant industries.
Stanton sends over a bulky folder on each industry, and Jackson inventories the contents:
- Item 1: Information on weather patterns and political unrest in key production regions.
- Item 2: Studies on the relationship between inflation and buying patterns.
- Item 3: Recent regulatory changes and projections of what is likely to happen in the event of a change in the party controlling Congress.
- Item 4: A breakdown of the new products recently launched or under development by major players in the industry.
- Item 5: Analysis of the economic and business pressures facing major end markets.
- Item 6: A report on industry concentration and the capacity of major companies in the industry.
- Item 7: Reports on companies Zinsser covers, including Smith and Jones.
In his review of the information provided by Stanton, Jackson learns the following about Smith:
- The Federal Trade Commission is considering the revocation of a tariff on one of Smith’s most important products.
- Smith’s biggest concern is that rivals’ products will render its own obsolete.
- Because of environmental concerns, permits for factories that produce Smith’s main output are difficult to acquire.
- The consumer products Smith makes are quite expensive, catering to an upscale clientele.
- Smith differentiates itself based on quality.
After completing his analysis of Smith and Jones, Jackson turns to his next task. He must calculate the expected growth rate of Cobbleman’s Curious Commodities. Jackson reviews some information about Cobbleman’s. However, since the company’s business is an unusual niche, with minimal information available, he is having trouble determining the life cycle of its industry. At the moment, there is little demand for the company’s products, and those products are not capturing the imagination of the market. Cobbleman’s has also issued new stock several times in the last five years. He suspects the company’s industry is in either the pioneer or decline stage.
Based solely on Jackson’s initial research, and assuming the economy is contracting, how are Smith and Jones best classified?
Smith Jones
A) Growth Cyclical
B) Defensive Defensive
C) Growth Defensive
Q10. Based solely on Jackson’s initial research, how are the industries to which Smith and Jones belong best classified?
Smith Jones
A) Mature Pioneer
B) Growth Decline
C) Growth Pioneer
Q11. Which of the items in the company research folder is of the least use in analyzing demand?
A) Item 3.
B) Item 1.
C) Item 4.
Q12. Jackson wants to conduct a supply analysis for Jones. He should rely most heavily on:
A) Item 2.
B) Item 6.
C) Item 5.
Q13. Based solely on Jackson’s review of Smith’s industry using Stanton’s data, which of the following conclusions is safest to draw?
A) Smith’s industry is in the mature stage of its life cycle.
B) Smith should enjoy substantial pricing power over the next year.
C) Smith is more susceptible to foreign influences than to changes in the inflation rate.
Q14. Jackson should know that Cobbleman’s industry is in the pioneer stage because of its:
A) low profit margins.
B) low demand for products.
C) high requirements for capital. | 
发表于 2009-3-6 14:28
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