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Unformatted text preview: ccessful only to the extent that they provide competitive advantage over the strategies pursued by rival firms. Potential entry of new competitors. Whenever new firms can easily enter a particular industry, the intensity of competitiveness among firms increases. Potential development of substitute products. In many industries, firms are in close competition with producers of substitute products in other • • COMPETITIVE ANALYSIS: PORTER’S FIVE-FORCES MODEL Bargaining power of suppliers. The bargaining power of suppliers affects the intensity of competition in an industry, especially when there are a large number of suppliers, when there are only a few good substitute raw materials, or when the cost of switching raw materials is especially costly. Bargaining power of consumers. When customers are concentrated, large, or buy in volume, their bargaining power represents a major force affecting intensity of competition in an industry. In particular, consumers gain increasing bargaining power under...
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