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Questions and Answers
Which of the following is true about the threat of substitute products/services?
Which of the following is true about the threat of substitute products/services?
- Substitutes can increase the profit potential of an industry
- The threat of a substitute is low if it offers an attractive price-performance trade-off to the industry’s product
- Strategists need not be alert to changes in other industries that may make them attractive substitutes
- Substitutes can limit the profit potential of an industry by placing a ceiling on prices (correct)
What can an industry do to distance itself from substitutes?
What can an industry do to distance itself from substitutes?
- Increase the buyer's cost of switching to the substitute
- Lower prices to match the substitute's price-performance trade-off
- Improve product performance and marketing (correct)
- Nothing, as substitutes are always a threat to an industry's profitability
When is the threat of a substitute high?
When is the threat of a substitute high?
- If it offers a higher price-performance trade-off than the industry's product
- If the industry's product has a unique feature that cannot be replicated by the substitute
- 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 (correct)
- If the buyer's cost of switching to the substitute is high
What can increase the intensity of rivalry among existing competitors in an industry?
What can increase the intensity of rivalry among existing competitors in an industry?
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Under what circumstances can rivalry among competitors actually increase the average profitability of an industry?
Under what circumstances can rivalry among competitors actually increase the average profitability of an industry?
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What is the effect of high rivalry on the profitability of an industry?
What is the effect of high rivalry on the profitability of an industry?
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What are some factors that can increase the intensity of rivalry among competitors?
What are some factors that can increase the intensity of rivalry among competitors?
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What can positive sum competition do for an industry?
What can positive sum competition do for an industry?
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What is the impact of high rivalry on the profitability of an industry?
What is the impact of high rivalry on the profitability of an industry?
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