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Porter's Five Forces
How attractive is an industry? Look at five pressures: rivalry among competitors, the threat of new entrants, the bargaining power of suppliers, the bargaining power of buyers, and the threat of substitutes. The stronger the forces, the harder it is to make money.
Ride-hailing: low barriers let new apps enter, riders switch apps for a dollar (buyer power), drivers drive for several apps (supplier power), and transit and scooters are substitutes. Profits are hard to come by.
Which force squeezes our margins the most?
Looking only at direct competitors. Substitutes and buyer power often hurt more than rivals do.
Pick the industry you work in. Which force is strongest? What would a company do to weaken it?
Streaming services keep raising prices and customers keep canceling and rejoining. Which force is that?
Show the answer
Buyer power, helped by low switching costs, plus rivalry among the services.