Question

which of the following statements is not true about the five forces in porter's industry/competitive analysis model? a. these forces offers a model to help assess overall attractiveness of an industry and provides the basis for how a firm should position itself to gain and sustain a competitive advantage. b. competition in the model is described as the tug-of-war between the five forces to capture as much as possible of the economic value created in an industry. c. the relative strengths of the five forces that shape competition are context-dependent. d. the stronger the five forces in an industry, the greater the industry's profit potential.

Answer 1

Option d, 'The stronger the five forces in an industry, the greater the industry's profit potential,' is not true about the five forces in Porter's industry/competitive analysis model.

Step-by-step explanation:

Option d, 'The stronger the five forces in an industry, the greater the industry's profit potential,' is not true about the five forces in Porter's industry/competitive analysis model.

The five forces in Porter's model are:

1. Competition among existing firms in the industry
2. Threat of new entrants
3. Threat of substitute products or services
4. Bargaining power of buyers
5. Bargaining power of suppliers

According to Porter, these forces help assess the overall attractiveness of an industry and determine a firm's position to gain and sustain a competitive advantage. The stronger the forces, the more challenging it is for a firm to achieve and maintain profitability.

Answer 2

The incorrect statement about Porter's Five Forces is that stronger forces indicate greater profit potential; in fact, stronger forces typically reduce profitability.

Step-by-step explanation:

The statement that is not true about Porter's Five Forces is option d: “the stronger the five forces in an industry, the greater the industry's profit potential.” This is incorrect because the model actually suggests that the stronger the forces, the harder it is for companies to achieve high profits. To clarify the other options: a. Porter's model does indeed assess the overall attractiveness of an industry and provide a basis for competitive positioning. b. The model describes competition as a tug-of-war between the five forces, which is a correct representation of its purpose. c. The relative strengths of the five forces are indeed context-dependent, as they can vary from industry to industry or change over time due to external factors. Therefore, the model dictates that an industry is less attractive and has lower profit potential when the five forces are strong.