Reading 39: Industry Analysis- LOS d～ Q1-5

government, technology, developed, Chinese, readers

LOS d: Analyze the impact of external factors (e.g., technology, government, foreign influences, demography, and social changes) on industries.

Q1. Infomaster Inc. is a financial web portal company that collects and translates financial news releases into Chinese for Chinese readers worldwide. The technology platform that Infomaster developed several years ago is now operating smoothly. Nevertheless from time to time, there are a few flaws in the system. Currently Infomaster is aggressively marketing its products via financial forums and investor websites. Last year, Infomaster was able to earn a small profit.

Which stage of the industry cycle is Infomaster operating in?

A) Mature.

B) Pioneer.

C) Growth.

Q2. Which of the following external forces have the most favorable impact on Infomaster?

A) Technological innovations that encourage new product development.

B) Aging baby-boomers have higher disposable incomes to invest.

C) Widespread use of the Internet among Chinese investors to read financial news.

Q3. In conducting a demand and supply analysis of Infomaster’s industry, which of the following is least likely a factor to consider?

A) Both of the choices listed are factors to consider.

B) Software that can translate English into Chinese.

C) The current availability of Chinese financial news on the Internet.

Q4. Outside forces impact industries in various ways. Analysts need to concentrate on how these outside forces might affect an industry over a three- to five-year horizon. Which of the following is NOT a force that can have an industry-specific impact?

A) Technology.

B) Demographics.

C) Business Cycle.

Q5. Which of the following statements concerning industry external factors is TRUE?

A) Companies that cater to the retirement population need not worry about demographic trends, since there will always be plenty of retirees.

B) For industries in the pioneering phase, that are introducing new technologies, an important question is: Are there laws that prevent competitors from copying their technology and inventions?

C) Companies need not be concerned with foreign competition because the government can be relied upon to erect barriers to imported goods so as to prevent countries with a comparative advantage from decimating another country's industries.