Answer :
Final answer:
Michael Porter's framework for understanding an industry includes five forces that affect industry profitability: threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitute products or services, and intensity of competitive rivalry.
Explanation:
Michael Porter's framework for understanding an industry includes five forces that affect industry profitability. These forces are:
- Threat of new entrants: The possibility of new competitors entering the industry, which can reduce profitability.
- Bargaining power of buyers: The ability of buyers to negotiate lower prices or better terms, which can affect profits.
- Bargaining power of suppliers: The ability of suppliers to increase prices or restrict supply, which can impact profitability.
- Threat of substitute products or services: The availability of alternative products or services that could attract customers away.
- Intensity of competitive rivalry: The level of competition within the industry, which can affect prices and profits.
By analyzing these forces, businesses can gain insights into the competitive dynamics of their industry and make strategic decisions accordingly.
Learn more about Michael Porter's framework here:
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