In The strategic planning process – part 1 technical article, in Porter’s five forces -> 5. The extent of competitive rivalry, I can not understand the following:
the cost structures if high – fixed costs prices are often cut to generate volume
Please elaborate it further. The structure of this sentence confuses me.
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The strategic planning process – part 1 (Technical article)
4y ago#1It means that if an industry has high fixed costs it will usually require a high volume of sales to generate enough contribution to first break-even then to make profits. Prices might be cut to win additional sales volume or to fiercely maintain current volume.
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