Final answer:
Michael Porter's model states that industry attractiveness is based on five forces: competitors, new entrants, suppliers, customers, and substitutes. These forces impact market competition, innovation, and the potential for new entrants in the industry. Thus, the option C is the correct answer.
Step-by-step explanation:
According to Michael Porter, industry attractiveness can be identified based on the five forces that include: c) competitors, new entrants, suppliers, customers, and substitutes. These forces are crucial in determining how much market power each firm in the industry possesses, and they directly influence the competitive nature of the industry. Market power and competition affect the incentives businesses have to innovate, as a route to earn higher profits through cost savings or unique product offerings. Innovation is critical as it provides a firm with a temporary edge over its competition, leading to above-normal profits. Moreover, high industry profits attract new entrants, which is an aspect of the market structure connected to competition and profitability.