Industry competitors include firms that trade similar products and services. Almost all business corporations have rivals, and in some cases, company rivalry is so fierce that firms have to fight for the business of potential clients. When firms are pushing close to one another, trying to leverage any competitive merit they may have (Tang & Chen, 2020), this fuels price wars and playing on weakness, the companies owners feel competitive pressure and find an opportunity to better their current place, and competition can be intense. At times the rivalry can even lead to market disruption.
Porter’s Five Forces Analysis is an essential tool for market planning. It is on the scope of monitoring profit margins for coming up with a strategy and knowing the rival landscape in which the firm operates. An intense industry rivalry leads to reduced company profit margins in the same industry (Durned & Mangen, 2020). Threats of substitute commodity availability lead to a limited ability to increase product prices. The bargaining power of customers has a great result on pricing strategy; suppliers’ bargaining power may result in need premium prices and limit profit margins. Barriers to entry of new entrants result as a hindrance against new market rivals.
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