Identify the five competitive forces that determine industry ...

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Identify the five competitive forces that determine industry profitably. Explain the purpose of analyzing these forces?
 
  What will be an ideal response?

Question 2

Savanna Combs opened a clothing boutique two years ago. Unfortunately, the boutique failed after 18 months.
 
  Savanna attributes the failure of her boutique to the facts that her employees couldn't adjust quickly enough to their new roles and that her boutique lacked a track record with outside buyers and sellers, which made it difficult to form partnerships and make sales. Savanna suffered from what research calls the ________.
  A) burden of novelty
  B) millstone of innovation
  C) liability of newness
  D) liability of preparedness
  E) burden of newness

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Answer to Question 1

The five competitive forces that determine industry profitability are the threat of substitutes, the threat of new entrants, rivalry among existing firms, bargaining power of suppliers, and bargaining power of buyers. The five competitive forces model is a framework for understanding the structure of an industry and was developed by Harvard professor Michael Porter. Each of Porter's five forces impacts the average rate of return for the firms in an industry by applying pressure on industry profitability. Companies analyze the five forces to try to position their firms in a way that avoids or diminishes the negative impacts of these forces.

Answer to Question 2

C

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