Two Factors Affecting Business Profitability

Business profitability can be affected by the following two factors as noted by Porter:

a.  Industry structure and competition within the industry: Porter used the Five Forces model; (Threats from potential entrants, Threats from substitute, Suppliers’ bargaining power, Customers’ bargaining power, Competitive rivalry) to explain the factors affecting competition.

b.  At the level of the individual company, achieving a sustainable competitive advantage.

Sustainable competitive advantage is achieved by creating value for customers.

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