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The model of pure competition implies that risk-adjusted rates of return should be constant across firms and industries. However, numerous economic studies have affirmed that different industries can sustain different levels of profitability; part of this difference is explained by industry structure.
Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates.
Diagram of Porter's 5 Forces
In the traditional economic model, competition among rival firms drives profits to zero. But competition is not perfect and firms are not unsophisticated passive price takers. Rather, firms strive for a competitive advantage over their rivals. The intensity of rivalry among firms varies across industries, and strategic analysts are interested in these differences.
Economists measure rivalry by......
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Title: Porter's Five Forces A Model For Industry Analysis
Approximate Word Count: 3361
Approximate Pages: 14 (250 words per double-spaced page)
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Porter's Five Forces A Model For Industry Analysis
Porter'S Five Forces A Model For Industry Analysis. The model of pure
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Porter's Five Forces A Model For Industry Analysis
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... their core competences, business model or network ... in excess of the industry average.
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... Siaw, I. and A. Yu. "An Analysis of the Impact of the Internet on Competition
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