In a rapidly growing industry, many firms may be able to achieve an acceptable rate of growth simply by keeping pace with the industry. But for companies operating in a mature industry, achieving acceptable growth usually requires taking market share from competitors, and competition for market share tends to cause intense rivalries. When buyers do not perceive any significant differences among competing suppliers for a particular product or service, those buyers will base their purchase decisions primarily on price and generic service features. Competition based on price and generic service attributes tends to create strong competitive rivalry because competitive moves by one company are fairly easy for other firms to match. These actions can cause the average profitability of the entire industry to be persistently low.
Exit barriers can be economic or emotional in character.
In industries that are composed primarily of small, privately held companies, exit barriers can be particularly high, because of the personal goals and fears of business owners. The bargaining power of an industry's customers can have a dramatic impact on the average profitability of that industry. Most industries, however, sell to a variety of customers, and not all buyers possess the same bargaining power. This fact makes customer selection a critical strategic decision. When a given customer purchases a substantial portion of a company's total sales, that customer will possess significant bargaining power.