For the firm to make a profit it must create value for customers . Hence, it must understand its customers. Second, in creating value, the firm acquires goods and services from suppliers. Hence, it must understand its suppliers and manage relationships with them. Third, ability to generate profitability depends on the intensity of competition among firms that vie for the same value-creating opportunities. Hence, the firm must understand competition. Thus, the core of the firm's business environment is formed by its relationships with three sets of players: customers, suppliers, and competitors. This is its industry environment.