Exit barriers are also important as they vary widely across industries depending on the amount of sunk costs. These are costs a company will not recover when it exits a business.

Power of supplier: Integration potential Industry dynamics might be changed, for example, by vertical integration
of suppliers.

Threat by new competitors: High entry barriers can decrease the threat by new competitors. Entry barriers can result from:

• Economies of scale
• Product differentiation
• Cost advantages
• Capital needs
• Access to distribution channels
• Technology know-how
• Access to raw materials
• Location advantages
• Government subsidies
• Learning curve/product experience.

Threat by substitutes: The quality or price of substitutes poses a threat to an industry since those substitutes may induce a structural change of an industry.

Power of buyers: Price sensitivity and bargaining power of buyers have a great effect on the profitability of industries. The automobile industry is a good example at this point. The build-up of overcapacities created a buyers market.