Which of the following is a characteristic of an emerging industry?

An emerging industry is in its formative stage, characterized by significant uncertainty and a lack of established operational norms. A key feature is high unit costs. This is because firms have not yet achieved economies of scale, production processes are often inefficient or experimental, and significant investments in research, development, and market creation have not been fully amortized. As the industry matures, companies descend the learning curve, processes become standardized, and production volumes increase, leading to a steep decline in unit costs. This initial high-cost structure is a fundamental challenge for firms in this phase.

A. Established strategy of players. Strategies are experimental and in flux; there are no proven or established "rules of the game" for competition in an emerging industry.
B. Low number of new firms. Emerging industries typically attract a high number of new entrants and spin-offs, hoping to capitalize on the new opportunity.
D. Technical expertise. While firms may require technical expertise, the industry itself is better characterized by high technological uncertainty, not established expertise. ---

1. Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press. In Chapter 10, "Competitive Strategy in Emerging Industries," a common structural characteristic listed is "High initial costs but steep cost reduction" (p. 216). This directly supports that high unit costs are a feature of this industry stage.

2. Grant, R. M. (2016). Contemporary Strategy Analysis (9th ed.). Wiley. In the chapter on "Industry Evolution and Strategic Change," Grant describes the introduction/emerging phase as being characterized by small-scale production and a lack of standardization, which contribute to high costs.

3. University of Washington, Foster School of Business. (n.d.). MGMT 430: Strategic Management, Lecture 5: Industry Evolution. Course materials summarizing the industry life cycle model note that the embryonic/emerging stage features high production costs due to low volumes and process inefficiencies.