Developing Strategy through External Analysis
Read this section to learn the difference between internal and external forces and how they affect organizations. Attempt the exercises at the end of the section.
Porter's Five-Forces Analysis of Market Structure
High Exit Barriers
Sometimes companies continue competing in an industry even though the returns on their invested capital are low or negative. Firms making this choice likely face high exit barriers, which include economic, strategic, and emotional factors, causing companies to remain in an industry when the profitability of doing so is questionable.