Forces of competition and deregulation were important factors relating to profitability in both (Porter, 1988)
. However, we will look at the five forces of the model in more detail.
Rivalry among competitors
Competition in an industry is more intense if there are many comparable rivals trying to satisfy the wants and needs of the same customers in the same market or market segment. Moreover, competition increases where industry growth is slow, costs are high and there is a lack of product differentiation. High exit barriers from a market or industry contribute to increased competition. Firms may find it difficult to get out of a business because of the relationship of the business with other businesses in which they are engaged. An organization may also have considerable investments in assets which are used for the specific business and for which no valuable other use can be found.