The correct response is No – rivalry between existing suppliers is high. Exit barriers refer to the
difficulty suppliers face when attempting to leave a market or industry. These barriers may include
high investment in specialised assets, contractual obligations, redundancy costs, or reputational
damage. When suppliers are unable or unwilling to exit, they remain within the industry regardless
of declining profitability. This forces them to compete aggressively to retain market share, which
increases rivalry among existing firms.
Options A and B are incorrect because the question relates to rivalry, not directly to buyer or supplier
power. Option D is also incorrect because exit barriers do not influence new suppliers entering; they
affect current suppliers trying to leave.
A practical example is the oil and energy industry, where huge capital investments make it very costly
to exit. Companies stay even during downturns, resulting in fierce rivalry.
[Ref: CIPS L5M6 Study Guide, p.114 – Porter’s Five Forces: Exit Barriers and Rivalry]
