According to the five forces model, the stronger the five forces, the lower the industry's:

• A. profitability
• B. number of competitors
• C. market demand
• D. production costs

Answer: (A)

Verified step by step guidance

1. Understand that the Five Forces Model, developed by Michael Porter, analyzes the competitive forces within an industry that affect its profitability.
2. Identify the five forces: (1) Threat of new entrants, (2) Bargaining power of suppliers, (3) Bargaining power of buyers, (4) Threat of substitute products or services, and (5) Rivalry among existing competitors.
3. Recognize that when these forces are strong, they increase competition and pressure on prices, costs, and investment, which tends to reduce the overall profitability of firms in the industry.
4. Note that the model does not directly affect the number of competitors, market demand, or production costs, but rather the ability of firms to earn profits given these forces.
5. Conclude that the stronger the five forces, the lower the industry's profitability.