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CIPS L5M6 Exam - Topic 3 Question 7 Discussion

Actual exam question for CIPS's L5M6 exam
Question #: 7
Topic #: 3
[All L5M6 Questions]

High exit barriers in a marketplace mean that rivalry between suppliers is low. Is this statement TRUE?

Show Suggested Answer Hide Answer
Suggested Answer: C

The correct response is No -- rivalry between existing suppliers is high. Exit barriers refer to the difficulty suppliers face when attempting to leave a market or industry. These barriers may include high investment in specialised assets, contractual obligations, redundancy costs, or reputational damage. When suppliers are unable or unwilling to exit, they remain within the industry regardless of declining profitability. This forces them to compete aggressively to retain market share, which increases rivalry among existing firms.

Options A and B are incorrect because the question relates to rivalry, not directly to buyer or supplier power. Option D is also incorrect because exit barriers do not influence new suppliers entering; they affect current suppliers trying to leave.

A practical example is the oil and energy industry, where huge capital investments make it very costly to exit. Companies stay even during downturns, resulting in fierce rivalry.

[Ref: CIPS L5M6 Study Guide, p.114 -- Porter's Five Forces: Exit Barriers and Rivalry]


by Genevieve at Oct 30, 2025, 10:57 PM

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Nelida
11 days ago
True, but that doesn't mean rivalry is low. C is still the best choice.
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Linwood
16 days ago
I agree, C is right. High exit barriers mean competition stays strong.
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Ora
21 days ago
B) Strong supplier power? Not convinced that's the whole story.
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Nilsa
26 days ago
Wait, really? I thought high exit barriers meant more competition.
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Viola
1 month ago
D) Totally agree, high exit barriers keep new suppliers out.
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Geoffrey
1 month ago
C) No way, rivalry is definitely high!
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Helaine
1 month ago
D) No -- high exit barriers mean no new suppliers will enter the marketplace. This seems logical, as high barriers would discourage new players from joining.
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Lawana
2 months ago
B) Yes -- rivalry is low as supplier power is strong. I think this is the correct answer since high exit barriers give suppliers more control over the market.
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Lovetta
2 months ago
C) No -- rivalry between existing suppliers is high. This makes sense as high exit barriers would limit competition and lead to less rivalry.
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Wayne
2 months ago
This is tricky! I thought high exit barriers meant suppliers would fight harder to stay in the market, but I can see how it could also mean less rivalry. I’m torn between C and D.
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Viola
2 months ago
I practiced a similar question where high exit barriers led to increased competition among existing firms. I think C makes sense here too.
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Aide
2 months ago
A) Yes -- buyer power is strong, so rivalry is low.
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Janine
2 months ago
I think the statement is false. C makes sense.
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Danica
3 months ago
I’m not sure, but I feel like high exit barriers might actually discourage new suppliers from entering, which could mean less rivalry overall. Maybe D is the right choice?
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Linn
3 months ago
But what about D? High exit barriers keep new suppliers out.
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Glendora
3 months ago
I think I remember that high exit barriers usually mean companies are stuck in the market, which could lead to more rivalry. So, I’m leaning towards option C.
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Denise
3 months ago
Ugh, this question is confusing me. I'm not sure if high exit barriers mean rivalry is high or low. I'll have to review the concepts around market structure and competition to figure this out.
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Amber
4 months ago
I've got a good feeling about this one. High exit barriers mean suppliers are locked in, so they can't really compete aggressively with each other. I think the correct answer is B - rivalry is low because supplier power is strong.
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Gretchen
4 months ago
Okay, let's see. High exit barriers mean it's hard for suppliers to leave the market, right? So that could reduce the threat of new competitors entering. I'm leaning towards option D, but I'll double-check my reasoning.
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Lorriane
4 months ago
Hmm, this one's tricky. I'm not 100% sure about the relationship between exit barriers and rivalry. I'll need to think it through carefully and consider the different options.
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Dominic
4 months ago
I think the key here is understanding how high exit barriers impact rivalry between existing suppliers. The statement seems to suggest that high exit barriers lead to low rivalry, but I'm not totally sure about that.
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Altha
15 hours ago
Exactly! Suppliers are stuck, so they fight harder for market share.
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Justine
6 days ago
I believe the statement is misleading. High exit barriers usually mean more competition.
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