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Question 1. Consider two similar industries, portal crane manufacturing (PCM) and
forklift manufacturing (FLM). The PCM industry has three incumbents with annual sales
of $800 million, $200 million and $100 million, respectively. The FLM industry has also
three incumbents, with annual sales of $500 million, $450 million and $400 million,
respectively. Which industry is more likely to experience a higher level of rivalry? – PCM will experience higher degree of rivalry because the overall market size is lower in that industry ([800+200+100 = $1.13] < [500+450+400 = $1.35l3D. and
the rivalry is always higher in the industries with lower demand – FLM will experience higher degree of rivalry, because the size of its two smaller competitors is larger than the size of the two smaller competitors in the PCM
industry ($450M>$200M and $400M>$100M) – We cannot tell from the information given: The sum of the market share of the top four competitors, normally used to estimate the industry concentration (so-called
CR4), cannot be calculated from the information above: we simply do not have
enough incumbents! – FLM will experience higher degree of rivalry because the sum of the squared market shares of its incumbents, calculated from the information given (at .336),
i

 
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