BMIS – L1 – SA – Q6.5 – Competitive Forces and Markets

The Five Forces model is intended to explain the reasons for

A   the strength of competition in an industry

B   the selection of product-market strategies

C   sources of sustainable competitive advantage

D   the fragmentation of industry

A

Explanation:
The Five Forces model, developed by Michael Porter, analyzes the competitive intensity within an industry by examining five forces: threat of new entrants, bargaining power of buyers, bargaining power of suppliers, threat of substitutes, and industry rivalry. Option A correctly identifies its purpose. Option B relates to strategic choices, not the model’s focus. Option C pertains to competitive advantage, which is an outcome, not the model’s primary aim. Option D (fragmentation) is unrelated. The answer is sourced from the provided document