9 Questions
Which of the following is true about the threat of substitute products/services?
Substitutes can limit the profit potential of an industry by placing a ceiling on prices
What can an industry do to distance itself from substitutes?
Improve product performance and marketing
When is the threat of a substitute high?
If it offers an attractive price-performance trade-off to the industry’s product or if the buyer’s cost of switching to the substitute is low
What can increase the intensity of rivalry among existing competitors in an industry?
A decrease in industry growth
Under what circumstances can rivalry among competitors actually increase the average profitability of an industry?
When competitors aim to serve the needs of different customer segments
What is the effect of high rivalry on the profitability of an industry?
It decreases the profitability of an industry
What are some factors that can increase the intensity of rivalry among competitors?
Competitors are few and unequal in size and power
What can positive sum competition do for an industry?
Expand the industry by better meeting the needs of more customer groups
What is the impact of high rivalry on the profitability of an industry?
It limits the profitability of an industry
Are you aware of the Threat of Substitute Products/Services? Take this quiz to test your knowledge and learn how substitutes can impact an industry's profitability and growth. Identify the key strategies that industries can adopt to distance themselves from substitutes and stay competitive. Boost your understanding of this critical concept with our interactive quiz!
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