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Entry Cholces and Industry Dynamles

Entry Choices and Industry Dynamics

The important lessons learned from the Five Forces Model are that the stronger the forces, the lower the Industry's ability

to earn above$-$average profits and the lower the firm's ability to galn and sustain a competitlve advantage. Conversely, the

weaker the forces, the greater the industry's ability to earn above$-$average profits and the greater the firm's ability to gain

and sustain competitlve advantage. Therefore, a company's strategic leaders need to craft a strategic position that

leverages weak forces into opportunitles and mitigates strong forces that are potentlal threats to the firm's ability to gain

and sustain a competitlve advantage.

The Five Forces model is useful In understanding an Industry's profit potentlal but much like other static models, it

provides only a point in time view of a continuously changing industry. It's difficult to determine the speed of change

Within an Industry or the rate of Innovation. As a result, strategic leaders must repeat their analysis frequently to create a

more accurate plcture of thelr Industry and the Industry dynamics.

This exercise is important because it explains the difference between Industry dynamics and industry convergence. As a

manager, you need to understand the industry dynamics and the ways in which you can position your firm to mitigate the

threat of strong competitlive forces to earn above average profits.

The goal of this exercise is to demonstrate your understanding of Industry dynamics and the ways in which companles can

reconfigure the industry structure to meet these changing dynamics.

After reading the relevant content in Chapter $3,$ complete the activity that follows.

$4$a$.$ A key Insight of the Flve Forces Model is th$...$

Multiple Choice

who the competition is:

what type of entry they will make.

how and where to enter.

the products or services they offer.

the timing for entry.