According to the textbook, the five competitive forces included in five-forces model determine:
A) the average rate of new business starts in an industry
B) the average growth rate for the firms in an industry
C) the average rate of return for the firms in an industry
D) the average sales for the firms in an industry
E) the average failure rate for the firms in an industry

Question

Quizplus · Accepted Answer

The five forces included in the five-forces model (threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products or services, and rivalry among existing competitors) determine the average rate of return for the firms in an industry. This is because these forces affect the competitive environment in which firms operate, which in turn influences their ability to generate profits.

According to the Textbook, the Five Competitive Forces Included in Five-Forces