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:/
/
Thepricethatconsumersarewillingtopayforaproductdepends,in
part,ontheavailabilityofsubstituteproducts.
A.ThreatofSubstitutes
III. TheFiveCompetitiveForcesThat
DetermineIndustryProfitability
Forexample,therearefewifanysubstitutesforprescriptionmedicines,
whichisoneofthereasonsthepharmaceuticalindustryissoprofitable.
Incontr ast,whenclosesubstitutesforaproductdoexist,industry
profitabilityissuppressedbecauseconsumerswilloptnottobuywhen
thepriceistoohigh.
Theextenttowhichsubstitutessuppresstheprofitabilityofanindustry
Universityof Zurich
ISU InstituteforStrategyandBusinessEconomics
UlrichKaiser
AprimerinEntrepreneurship
Springsemester2008
10
alternatives.
Thisiswhyfirmsinanindustryoftenoffertheircustomersamenitiesto
reducethelikelihoodthattheywillswitchtoasubstituteproduct,even
inlightofapriceincrease.
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