Answer:
there is persistent excess capacity.
Explanation:
Pressures for cost reduction are intense in industries where there is persistent excess capacity.
Generally, when the level of supply is relatively higher than the level of demand at a specific period of time, the price of goods and services are usually expected to fall.
In this scenario, there is persistent excess capacity in the industry and as such in order to be able to keep up with sales, the company will have to reduce its selling price. This will enable the company to have competitive advantage over its rivals in the same industry.
