In Porter's Five Forces framework, which force is most directly influenced by the other four forces?

• A. Threat of new entrants
• B. Rivalry among existing competitors
• C. Threat of substitute products or services
• D. Bargaining power of suppliers

Answer: (B)

Verified step by step guidance

1. Understand that Porter's Five Forces framework 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 the 'Rivalry among existing competitors' is the central force that is directly influenced by the other four forces because it reflects the intensity of competition in the industry.
4. Analyze how each of the other four forces impacts rivalry: for example, more new entrants increase competition, powerful suppliers or buyers can intensify rivalry, and substitutes can shift customer preferences, all affecting the level of rivalry.
5. Conclude that among the five forces, 'Rivalry among existing competitors' is the force most directly influenced by the other four forces.