Threat of new entrants
In any industry that churns high profit or high proft margin, it will attract more entreprenuers to venture into it. More companies coming into the same industry will reduce proft margins of existing players. However, there are lot barriers to entry for new entrants. This includes economies of scale, sunk costs, loyal customers that existing players have, capital issues and patents.
Threat of substitutes
Substitutes of a product or a service in an industry will erode profit in the industry itself. Moreover, substitutes are products or services that are similar with existing products or services in the market.
Power of buyers
In industries where buyer concentration is very high, the power of buyers becomes high too. It can be more evident if switching costs are low. Buyers can demand more or bargain more if there is no product differentiation.
Power of suppliers
In industries where supplier concentration is very high, the power of supplier becomes high too if switching costs are high. Suppliers can demand more.
Rivalry
Rivarly happens when existing players in an industry compete to gain more market share.
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