Competitive rivalry is considered the strongest of the Five Forces
because of its impact on the competitive environment a company operates in. The high competitive rivalry will make an industry more competitive, thus decreasing the profit potential for the firm. This rivalry could gain traction when the company feels pushed by its competitors. These actions taken by the company could impact the competitors negatively .
The degree of competitiveness will directly impact the potential for profit that a company can expect. When there is a highly competitive market, the company will be deleterious with lower profit margins and less ability to decide prices. In turn, they will take action to retaliate against these actions. This has the potential of turning into a cycle that may end up harming the industry as a whole.If the competition ends up being based on price, it can become precarious and affect profit margins. On the other hand, advertising battles may raise the demand for a profit across the industry.