Challenge questions
1. Government policies can have a significant impact on the average profitability of firms in an industry. Government, however, is not included as a potential threat in the five forces model. Should the model be expanded to include government (to make a “six forces” model)? Why or why not?
2. How would you add complementors to the five forces model? In particular, if an industry has large numbers of complementors, does that make it more attractive, less attractive, or does it have no impact on the industry’s attractiveness? Justify.
3. Which firm will have a higher level of economic performance: (a) a firm with valuable, rare, and costly‐to‐imitate capabilities competing in a very attractive industry or (b) a firm with valuable, rare, and costly‐to‐imitate capabilities competing in a very unattractive industry?
4. Will a firm currently experiencing competitive parity be able to gain sustained advantage by studying another firm that is experiencing competitive advantage? Why or why not?
