Find Profit Pools Before Chasing Revenue
Use Porter Five Forces to judge whether a revenue pool is attractive enough to pursue.
The move: inspect the profit pool before chasing the revenue pool. Why Revenue Size Misleads Large markets are tempting because the spreadsheet can make a small share look meaningful. But industry structure determines how much of that revenue a company can keep. If buyers are powerful, they push price down. If rivalry is intense, acquisition costs rise. If substitutes are acceptable, differentiation must be sharper. If suppliers control scarce inputs, margins get squeezed. If entry is easy, success attracts copycats. How The Five Forces Help Porter's Five Forces give a structured way to ask where power sits. Revenue-growth strategy improves…
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