The five forces analysis framework should be applied at what level? (choose one)

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BlackTom AI · Accepted Answer

The question asks about the level at which a five forces analysis should be applied, and we must evaluate each option in turn to see which level aligns with the framework's scope.
Option 1: 'firm'. While some strategic tools focus on the firm level, the five forces framework is designed to assess external competitive pressures that shape an industry as a whole, not just one individual firm. Analyzing at the firm level would risk overlooking systemic factors that affect all players in the market.
Option 2: 'industry'. This level is a natural fit for the five forces framework, because the model examines the intensity of competition and profitability by looking at the broader competitive forces acting on an entire industry—rivalry among existing firms, threat of new entrants, threat of substitutes, bargaining power of buyers, and bargaining power of suppliers. These forces operate across firms within the same industry and determine overall industry structure and profitability.
Option 3: 'university'. Academic or institutional contexts are not the intended unit of analysis for the five forces framework, which focuses on market dynamics and competitive forces in business environments. Treating a university as the unit would misapply the model to a non-market or organizational boundary that doesn’t capture industry-level dynamics.
Option 4: 'nation'. While macroeconomic and national-level analyses can inform business strategy, the five forces framework is not designed to evaluate country-level environments. National factors influence industries, but the framework analyzes the competitive landscape at the industry level, not at the macro-national scale.
In summary, the core idea of the five forces model is to assess competitive pressures within an industry context, rather than at the firm, institutional, or national level. The remaining options either misplace the unit of analysis or extend the framework beyond its intended scope.

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The five forces analysis framework should be applied at what level? (choose one)

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