Elements of the five forces can be quantified.This is important for analyzing industry structure.Which of the following is not an example of an element that can be quantified?
A) the percentage of the buyer total cost accounted for by the industry product
B) the percentage of industry sales required to fill a plant or operate a logistical network to efficient scale
C) the buyer switching cost
D) the governmental regulatory policy

Question

Quizplus · Accepted Answer

The point of industry analysis is not to declare the industry attractive or unattractive but to understand the underpinnings of competition and the root causes of profitability. As much as possible, analysts should look at industry structure quantitatively, rather than be satisfied with lists of qualitative factors. Many elements of five forces can be quantified:the percentage of the buyer total cost accounted for by the industry product (to understand buyer price sensitivity); the percentage of industry sales required to fill a plant or operate a logistical network to efficient scale (to help assess barriers to entry); and the buyer switching cost (determining the inducement an entrant or rival must offer customers).

Elements of the Five Forces Can Be Quantified