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Hi,
Could you please explain to me exactly what qualifies as a substitute? Is it only restricted to other goods/services that provide the same core purpose.I’m asking because i was doing the June 2008 question 1 on Autofone and they asked about Porter’s 5 forces on the retail shops division.
In the scenario they mention the popularity of online stores, so I was thinking wouldn’t online stores be a substitute to retail shops? Coz it won’t qualify as new entrants right, since its not having a retail store…Please help me understand this! Thanks
I think there is a fine line between new entrants and substitutes. New entrants is more of almost exactly the same; substitutes, as you say, gives the same to the consumer another way (eg mobile phones v land line phones).
The good news is that it does not really matter how you classify the matter: you have identified the threat – whether that is a new entrant or a substitute and have to consider what to do about that.
Dear sir,
Can you give the example who is the supplier for upstream business?
For example a mining company which own a mine, I presume that it itself is the ultimate supplier.Thank you and best regards,
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