1. There are several stages that product markets go through: These are Embryonic, Growth, Mature and Declining;
A. Mature and declining markets by virtue of their lack of growth can be high barrier companies, whose earnings can grow faster than sales for an extended period of time by reducing costs rapidly.
B. Mature markets (1-2% growth) can continue to prosper, assuming they maintain excess capacity. These markets are driven by new customer demand.
C. Growth markets take root almost immediately and grow rapidly driven by replacement buyers
2. Attributes of a company's competitive advantage, including land, capital, technological knowhow, and physical infrastructure, are known as:
a. local demand conditions.
b. framework characteristics.
c. factor endowments.
d. rivalry intensity.
3. A U.S. technology company has decided to move some of its manufacturing processes to facilities in Japan, utilizing the nation's expertise in technological manufacturing. Doing so gives them the ability to price their products at a lower price point locally than their other Made in America competitors. By performing this value creation activity in an optimal location, the company has:
a. realized location economies.
b. realized their multinational potential.
c. realized cost economies.
d. realized product economies.