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The five competitive forces that shape the strategy …

- - - - This threat places limits on the potential profitability of a sector. When the threat is high, established players must keep prices low or increase investment to discourage new entrants.
        
        Entry barriers. these are advantages that established players have compared to new entrants. There are seven important sources:
        
        Capital requirements
        
        Investing large amounts of financial resources to compete can prevent the entry of new competitors
        
        Advantages of established players regardless of size.
        
        Regardless of their size, established players will have cost or quality advantages that are not available to their potential rivals. These advantages are due to several factors such as proprietary technology, preferential access to the best sources of raw materials.
        
        Costs for customers to change providers.
        
        When buyers change suppliers, they must bear certain fixed costs. These costs can arise because when a buyer changes suppliers, they must, for example, change product specifications, retrain their employees on how to use a new product, or modify processes or information systems.
        
        Unequal access to distribution channels.
        
        The more limited the wholesale or retail channels are and the more crowded existing competitors have them, the more difficult it will be to enter a sector. Sometimes access to distribution is such a high barrier that new entrants have to bypass existing distribution channels and create their own
        
        Scale benefits on the demand side
        
        These benefits, also known as network effects, appear in industries where a buyer's willingness to pay for a company's product increases with the number of other buyers also using the company.
        
        Restrictive government policies
        
        Government policies can directly hinder or promote the entry of new competitors into a sector, and can also extend the other barriers to entry.
        
        Economies of scale on the supply side
        
        These economies appear when companies that produce at larger volumes enjoy lower costs per unit, since they can spread fixed costs among more units, use more efficient technology or demand better conditions from suppliers.
- - - - Plastic is a substitute for aluminum
        
        Email is a substitute for express mail.
- - - - The structure of a sector can be reformed in two ways:
        
        redividing profitability in favor of established players or expanding the general source of profits.
- - - - The rivalry often intensifies naturally in the long run. As the sector matures, growth slows.