The five forces, threat of entry, power of suppliers, power of buyers, threats of substitutes, and rivalry among existing firms, represent a snapshot of conditions within an industry (Rothaermel, 2017). The first force, threat of entry, represents risk that competitors will join and industry. Entrants into a new market can face barriers such as economies of scale, network effects, customer switching, capital requirements, and government regulation. The second force, power of suppliers, represents pressures a suppler can pressurize or influence buying decisions regarding quality products versus price, essentially affecting profitability potential. The power of buyers, the third force, represents bargaining and buying power consumer retain to demand lower prices or higher quality. The fourth force, threats of substitutes, concerns the availability of ready substitutes and its impact on a pricing strategy. The final force, rivalry among existing firms, is the intensity of competition within an industry. In general, an intensive competition among existing firm reduces profitability. A weaker force represents a greater opportunity for profit potential, and vice versa, a stronger force represents a reduced opportunity (Rothaermel, 2017). As mentioned, the five-force model snapshot is useful to understand potential profitability; however, it is static. Accordingly, a firm must repeat the analysis in accordance with changing industry conditions to remain
The five forces, threat of entry, power of suppliers, power of buyers, threats of substitutes, and rivalry among existing firms, represent a snapshot of conditions within an industry (Rothaermel, 2017). The first force, threat of entry, represents risk that competitors will join and industry. Entrants into a new market can face barriers such as economies of scale, network effects, customer switching, capital requirements, and government regulation. The second force, power of suppliers, represents pressures a suppler can pressurize or influence buying decisions regarding quality products versus price, essentially affecting profitability potential. The power of buyers, the third force, represents bargaining and buying power consumer retain to demand lower prices or higher quality. The fourth force, threats of substitutes, concerns the availability of ready substitutes and its impact on a pricing strategy. The final force, rivalry among existing firms, is the intensity of competition within an industry. In general, an intensive competition among existing firm reduces profitability. A weaker force represents a greater opportunity for profit potential, and vice versa, a stronger force represents a reduced opportunity (Rothaermel, 2017). As mentioned, the five-force model snapshot is useful to understand potential profitability; however, it is static. Accordingly, a firm must repeat the analysis in accordance with changing industry conditions to remain