Competitors use a variety of moves such as advertising, new offerings, and price cuts to try to outmaneuver one another to retain existing buyers and to attract new ones. in an industry are firms that produce similar products or services. The competitors The set of firms that produce goods or services within an industry. The Rivalry among Competitors in an Industry If the situation looks bleak, for example, one possible move is to exit the industry. Once executives determine how much profit potential exists in an industry, they can then decide what strategic moves to make to be successful. This could involve, for example, all five forces providing firms with modest help or two forces encouraging profits while the other three undermine profits. Most industries lie somewhere in between these extremes. If all the forces work to undermine profits, then the profit potential is very weak.
If none of these five forces works to undermine profits in the industry, then the profit potential is very strong. To do so, five forces analysis considers the interactions among the competitors in an industry, potential new entrants to the industry, substitutes for the industry’s offerings, suppliers to the industry, and the industry’s buyers. The purpose of five forces analysis is to identify how much profit potential exists in an industry.