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IMANET CMA Exam - Topic 12 Question 123 Discussion

The prospect for the long-term profitability of an existing firm is greater when
A) The firm operates in an industry with a steep learning curve in its production process
B) The costs of switching suppliers is low
C) New entrants are encouraged by government policy
D) Distribution channels are willing to accept new products

IMANET CMA Exam - Topic 12 Question 123 Discussion

Actual exam question for IMANET's CMA exam
Question #: 123
Topic #: 12
[All CMA Questions]

The prospect for the long-term profitability of an existing firm is greater when

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Suggested Answer: A

The prospects of long-term profitability are contingent upon the industry's exit and entry barriers. The entry of new firms in market decreases the prospect for long-term profitability. When a firm operates in an industry that has a steep learning curve, it ios more difficult for new firms to enter the market. Thus, the prospects of long-term profitability are greater for an existing firm.


by Clemencia at Mar 30, 2026, 07:26 AM

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Alonzo
5 hours ago
I think A is the best choice. Learning curves can lead to efficiency.
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Kristel
5 days ago
Distribution channels accepting new products? That’s a mixed bag!
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Yesenia
11 days ago
Surprised that new entrants are encouraged by policy, sounds risky!
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Edelmira
16 days ago
Really? I’m not sure low switching costs are a good sign.
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Son
2 months ago
Totally agree, option A makes the most sense!
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Olga
2 months ago
A steep learning curve can lead to better efficiency.
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Billy
3 months ago
Option D sounds plausible, but I wonder if it really guarantees long-term profitability. New products can also fail in the market.
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Miles
3 months ago
I remember a similar question where we discussed how government policies can impact market entry. Option C seems risky for existing firms.
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Valentine
3 months ago
I'm not sure about B. Low switching costs might actually make it easier for customers to leave, which could hurt profitability.
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Devora
4 months ago
I think option A makes sense because a steep learning curve can lead to lower production costs over time, right?
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