Mini$-$Case #$2-$ Industry Analysis

The text below describes a few facts about the fictional worldwide e$-$pads industry. The description is followed by a few questions about the industry. Please assume that each of the following statements about the industry is true and please answer the questions using only the information contained in the text description below. Suppose that the year is $2030$ and a new type of consumer device, the e$-$pad $($electronic pad$)$ is on the market.

More than $100$ million e$-$pads are sold each year. The manufacturing industry contains some manufacturers that have been able to report large profits $($e$.$g$.,$ Apple$)$ and some manufacturers $($e$.$g$.,$ HP$)$ that have reported low profits. Some additional relevant facts about the manufacturing industry include:

the cost of a typical factory $($which assembles $1$ million e$-$pads per year$)$ is about US$$100,000$;

there is a fairly small number of relatively large retailers for e$-$pads;

there are many suppliers for most of the components, but only two suppliers for the microchips that are the key components to the firm$$s product;

a large number of firms that had historically limited their activities to supplying e$-$pad components for sale to manufacturers like Apple & HP have entered into the worldwide branded e$-$pad manufacturing industry;

although the value of e$-$pads could be increased by R&D$,$ few firms have distinguished their e$-$pads this way; by contrast, the value of alternative products, such as the iPhone, has risen substantially over recent years thanks to successful R&D$,$ while the prices of such alternatives have been declining.

The intensity of rivalry among competitors in this industry is:

Group of answer choices

Low

High