Question

Overall, the average level of performance in an industry is likely to be highest when

A) the threat level of all five forces is high.
B) the threat level of rivalry and substitutes is low, but the threat level of suppliers, buyers and new entrants is high.
C) the threat level of rivalry, substitutes and new entrants is high, but the threat level of buyers and supplies is low.
D) the threat level of all five forces is low.

Answer 1

In an industry, the average level of performance is likely to be highest when there is low threat of rivalry and substitutes, but high threat of suppliers, buyers, and new entrants. The correct option is B).

Step-by-step explanation:

The correct option is B) the threat level of rivalry and substitutes is low, but the threat level of suppliers, buyers and new entrants is high.

In an industry, the average level of performance is likely to be highest when there is low threat of rivalry and substitutes, but high threat of suppliers, buyers, and new entrants. This is because low rivalry and substitutes allow businesses to operate with fewer competitive pressures, while high levels of suppliers, buyers, and new entrants create a more dynamic and competitive market.

For example, if an industry has limited rivalry and substitutes, companies can focus on improving their own products and services without worrying too much about competitors. At the same time, having a high level of suppliers, buyers, and new entrants ensures a diverse range of options and opportunities for collaboration, which can drive innovation and overall performance.