Understanding the forces that shape industry competition is the starting point for developing strategy. Every company should already know
what the average profitability of its industry is and how that has been changing over time. The five forces reveal why industry profitability is
what it is. Only then can a company incorporate industry conditions into strategy.
The forces reveal the most significant aspects of the competitive environment. They also provide a baseline for sizing up a company’s
strengths and weaknesses: Where does the company stand versus buyers, suppliers, entrants, rivals, and substitutes? Most importantly, an
understanding of industry structure guides managers toward fruitful possibilities for strategic action, which may include any or all of the
following: positioning the company to better cope with the current competitive forces; anticipating and exploiting shifts in the forces; and
shaping the balance of forces to create a new industry structure that is more favorable to the company. The best strategies exploit more than
one of these possibilities
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Implementation of a marketing strategy can improve business profitability because of implications for all aspects of the company's operations. The marketing strategy focuses company attention on particular target market segments and makes it clear what product characteristics are required for successfully satisfying customer needs. This focus eliminates marginal operations that don't contribute to business growth and promotes a streamlined approach to the company's business.