Answer:
Explanation:
a.
When a company decides to enter a new industry, there are various factors that must be considered be for in the decision making process. These factors give a summary on how that industry operates, which serves as a foundation in making decisions. It is usually recommended that the company conducts an analysis of the five forces before entering into a new market, these five forces are outlined below;
1. Risk of entry by a potential competitor
Risk of entry typically means the level of competitiveness that is expected if the company decides to enter the new market.
2. Power of supplies
This is the amount of bargaining power that buyers and suppliers have in that particular industry.
3. Substitutes to an industry's products
A substitute is a product that can be replaced by another since the market sees a similarity in value between the products.
4. Rate of innovation or change
Innovation can be defined as the act of transformation. The rate of innovation can therefor be defined as a measure of how much a product transforms with respect to time.
b. The five forces have to be considered for the following reasons;
1. The business venture is likely to fail if there is low barrier for entry, and there exists strong bargaining power between suppliers and buyers.
2. The business is also still likely to fail if there is a high barrier for entry, and there exists low bargaining power between the suppliers and buyers.
3. The business is likely to succeed if there is a low barrier for entry, and there exists high bargaining power between suppliers and buyers.
4. Finally, with a high barrier for entry, and a high bargaining power between suppliers and buyers there is a high likelihood that the business venture will succeed.
