Question

According to the five forces model, an unattractive industry would include all of the following characteristics EXCEPT

a. High threat of substitute products due to a large number of low cost alternatives.
b. High bargaining power of buyers due to low switching costs.
c. Low economies of scale needed for new firms to enter.
d. Overall high inventory turnover and high account receivable turnover

Answer 1

c. Low economies of scale needed for new firms to enter.

Step-by-step explanation:

The five forces model is a technique used to assess an industry in a bid to decide on corporate strategy.

These forces include Competition in the industry , Potential of new entrants into the industry , Power of suppliers , Power of customers , Threat of substitute products.

For an industry with low economics of scale, it is quite easy for new entrants to gain entry as the funds required for startups may be low making the industry attractive to new entrants.