Which of the following factors is a driving force that can weaken industry profitability?

Strong innovation from competitors is a driving force that can weaken industry profitability because it often leads to increased competition and heightened pressure on existing firms to improve their products or services. When competitors innovate, they may offer superior offerings at better prices, which can erode the market share of established companies. This scenario forces firms to either match or exceed the innovation levels, often resulting in higher research and development costs and increased marketing expenses aimed at retaining customer interest. As a consequence, profit margins can shrink due to the need to continually invest in product development and differentiation.

Moreover, if successful innovation leads to new market entrants or shifts in consumer preferences, established players may find their current business models challenged, leading to further downward pressure on profitability. Therefore, the presence of vigorous innovation in the industry serves as a critical driver affecting overall profitability negatively.