International Industry Analysis Porter 's Five Forces

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2.3 Inter-Industry Analysis – Porter’s Five Forces

The Strategic fit approach to management, describes that the prospect of profitability depends largely on the firm positioning itself in an “attractive industry” the attractiveness and therefore profitability is said to depend upon how competitive the industry is, “a highly competitive industry is less attractive and less profitable than an industry where the competition is less intense.” (www.netmba.com) According to Porter’s Five Forces Framework “attractiveness and profitability depends upon five elements of industry structure and how they interact determining the intensity of the competition within the industry” (Michael Porter, Competitive Strategy: Techniques for analysing industries and competitors). Included in this chapter is an explanation of the Five Forces and how they each affect Eurocity.

2.3.1 Rivalry amongst existing firms

Porter described that intense industrial rivalry can lead to higher costs; lower prices and therefore lower profitability. As there are a large number of competitors with little ability to differentiate their product, the market can be seen as very competitive and therefore unattractive. However, there are some compensating factors; such as, an applicant must give his permission to companies who wish to submit their CV and in return the applicant has to confirm that no other company will submit them for the position. This means that applicants should not be submitted by numerous

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