Businesses generally either dwell on their competitors’ activities or ignore them on the grounds that they are unable to exert any direct control. The amount of attention that needs to be paid to competitors varies according to the nature of the industry and market, and usually lies between these two extremes. Decision-makers may be guided by an
overall vision and specific objectives, but competitive pressures can also be decisive in determining their decisions.

The impact of competition Michael Porter has identified five forces affecting competition in an industry, and these provide an interesting lens through which to view current and potential competitors. The five forces are industry rivalry, market entry, substitutability, suppliers and customers.

Industry rivalry Companies in the same industry – be it banking, car manufacturing, travel and tourism, retailing or whatever – are the most obvious and prominent source of competition. The cola wars fought by Pepsi and Coca-Cola are just one example of this.