In general, profit potential ________ with greater competition, stronger potential entrants, products that are similar, and more-demanding customers and suppliers.

Question

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When competition increases, it leads to price wars where companies are forced to reduce their prices to remain competitive, leading to a decrease in profit potential. Strong potential entrants and similar products also increase competition, making it difficult for businesses to stand out and make a profit. More demanding customers and suppliers may also result in higher costs for the business, reducing the potential for profit. Therefore, profit potential typically decreases with these factors.

In General, Profit Potential ________ with Greater Competition, Stronger Potential