Casualty Actuarial Society (CAS) Exam 2025 – 400 Free Practice Questions to Pass the Exam

Rivalry among existing firms is one of the key forces that drives competition within an industry, as outlined in Michael Porter's Five Forces framework. This rivalry represents the intensity of competition among companies that are already operating in the same market. When competition is high, firms may engage in aggressive marketing, price reductions, and product innovations to gain market share, which can lead to lower profitability for all firms involved. High levels of rivalry can stem from several factors, including a large number of competitors, slow industry growth, and high fixed costs that compel companies to compete vigorously for sales.

In contrast, government regulations can influence industry dynamics but are not considered a direct force of competition. Market share fluctuations are outcomes affected by the competitive interactions but are not themselves a driving force. Similarly, fad products may impact short-term competition, but they do not represent an ongoing competitive force within the industry. Understanding the nature and impact of rivalry helps businesses strategize and navigate their competitive landscape effectively.