Which of the following statements about Porter's five forces model is accurate?
A) The potential profit of a company is caused mostly by random factors instead of by industry-specific factors.
B) Competition must be defined narrowly to focus on the closest competitors and plan ways increase profit potential.
C) Competition must be defined in a broad way to incorporate all of the key factors that influence profit potential.
D) The potential profit of a company is caused by two forces: threat of substitutes and rivalry among existing firms.

Question

Quizplus · Accepted Answer

Rather than defining competition narrowly as the firm's closest competitors to explain and predict a firm's performance, competition must be viewed more broadly to encompass not only direct rivals but also a set of other forces in an industry: buyers, suppliers, potential new entry of other firms, and the threat of substitutes.

Which of the Following Statements About Porter's Five Forces Model