In the five-forces framework, the growth rate of an industry will affect

Question

BlackTom AI · Accepted Answer

The question asks how the growth rate of an industry in the five-forces framework influences competition.
Option 1: 'the rivarly among existing competitors' — This is the area where industry growth rate has a direct impact. In rapidly growing industries, firms can expand without cutting prices or stealing market share from rivals, which tends to lessen competitive pressure. Conversely, in slow- or negative-growth industries, firms must fight harder for a shrinking cake, often intensifying rivalry. The growth rate shapes how aggressively incumbents compete.
Option 2: 'the suppliers power' — Supplier power is influenced by factors like supplier concentration, switching costs, and the availability of substitute inputs, not primarily by how fast the industry as a whole is growing. Growth rate does not directly determine supplier leverage.
Option 3: 'the threat of new entrants' — The growth rate can influence barriers to entry indirectly (e.g., potential entrants may be attracted to high-growth markets), but it is not the direct mechanism by which growth rate affects the competition among incumbents. Porter's model treats growth as a contextual factor that colors rivalry, not as the main determinant of entry threat itself.
Option 4: 'the barriers to entry' — Barriers to entry are structural factors (capital requirements, access to distribution, regulation) rather than a dynamic output of the growth rate. While growth can influence strategic considerations around entry, barriers to entry are not what growth rate primarily affects in the five-forces framework.
In summary, the growth rate primarily modulates the intensity of rivalry among existing competitors by changing the ease or difficulty of expanding market share, which in turn affects competitive behavior among incumbents. The other forces—supplier power, threat of new entrants, and barriers to entry—are shaped by different structural or contextual factors and are not the direct channels through which industry growth rate exerts its primary effect.

In the five-forces framework, the growth rate of an industry will affect

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