Industry and Competitor Analysis Form

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www.quickmba.com/strategy/porte r
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Universityof Zurich
ISU– InstituteforStrategyandBusinessEconomics
UlrichKaiser
AprimerinEntrepreneurship
Springsemester2008
9
Source:http:/
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Thepricethatconsumersarewillingtopayforaproductdepends,in
part,ontheavailabilityofsubstituteproducts.
A.ThreatofSubstitutes
III. TheFiveCompetitiveForcesThat
DetermineIndustryProfitability
Forexample,therearefewifanysubstitutesforprescriptionmedicines,
whichisoneofthereasonsthepharmaceuticalindustryissoprofitable.
Incontr ast,whenclosesubstitutesforaproductdoexist,industry
profitabilityissuppressedbecauseconsumerswilloptnottobuywhen
thepriceistoohigh.
Theextenttowhichsubstitutessuppresstheprofitabilityofanindustry
depends on the propensity for buyers to substitute between
Universityof Zurich
ISU– InstituteforStrategyandBusinessEconomics
UlrichKaiser
AprimerinEntrepreneurship
Springsemester2008
10
depends
on
the
propensity
for
buyers
to
substitute
between
alternatives.
Thisiswhyfirmsinanindustryoftenoffertheircustomersamenitiesto
reducethelikelihoodthattheywillswitchtoasubstituteproduct,even
inlightofapriceincrease.
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