According to the Five Forces framework, the greater the _____ in an industry, the lower the _____ in the industry will be.
A)degree of rivalry; average profits
B)product variation; average company profits
C)average company profits; average price
D)rivalry; number of companies

Question

Quizplus · Accepted Answer

The Five Forces framework states that the greater the degree of rivalry in an industry, the lower the average profits in that industry will be. This is because when there is intense competition among existing firms, they have to lower their prices and increase their costs in order to stay competitive. This drives down profit margins for all firms in the industry.

According to the Five Forces Framework, the Greater the _____