Bryan is a manager at a software firm. The CEO tells him that the industry as a

Question

Bryan is a manager at a software firm. The CEO tells him that the industry as a whole has become increasingly profitable over the past five years. Based on this information, Bryan is most likely to expect

a. increased competition in the future and therefore he should recommend that the company upgrade its products to slow the entry of rival companies

b. increase profitability in the future and therefore he should recommend that the company remain on its current course.

c. a leveling off of profitablility in the next few years and therefore he should recommend that the company cooperate with its rivals to stimulate the industry.

d. decreased competition in the next few years and therefore he should recommend that the company take advantage of its pricing power.

Explanation / Answer

When the industry has become profitable there will be an increase in the competition and hence the firm needs to improve it's products to have some speciality and superiority over other competitors. Hence Bryan must expect increased competition in the furture and therefore he should recommend that the company upgrade its products to slow the entry of rival companies. Hence the answer is a.

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