CFA Level 1 - Equity Investments
Forces that Determine Industry Competition
When analyzing an industry, it is important to determine what competitive forces affect the industry. Michael Porter discussed the concept of industry competition in numerous books and articles.
He believes that there are 5 main competitive forces that drive industry competition:
1.Rivalry among existing competitors.
2.Threat of new entrants.
3. Threat of substitute products.
4.Bargaining power of buyers.
5.Bargaining power of suppliers.
(1) the intensity of competition and
(2) whether the competition among existing firms is growing.