Substitutes and the Five Forces Model

Five Forces (Porter) | Five Forces Analysis
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Professor, India

Substitutes and the Five Forces Model

I am interested in '(innovative) substitutes' such as:
1. New inventions (e.g., mobile phones as communicators)
2. New applications of existing products (e.g., internet on mobile phones)
3. New technologies to gainfully use existing materials more effectively (e.g., nanotechnology)
4. New discoveries about an existing product/material (e.g., use of aspirin to treat heart ailments)
The list goes on.
Is the impact of the likes of the above covered in Porter's framework?
I think the threat from such forces which could make your product or service obsolescent / redundant is (strategically) more important today than all other forces put together, because the timeframes for various new inventions and discoveries has come down a lot. We might call it an increase in the rate of evolution of mankind...

  Jagdish B Acharya
Consultant, India

Major Inventions/Substitutes Make New Rules, they don't Follow Old Rules

When a substitute or some invention arrives, it can change the paradigm and new rules or business models can be born and wanted. It is difficult to find models which are able to explain substitutes o...

  Satriyo Dharmanto
Deputy ICT Director, Indonesia

Porter's 5 Forces and New Technological Substitutes

It's a very useful tool that can be used to make a significant analysis of an industry, in combination with other related tools. Regarding the threat of substitutes, I personally think that new techn...

  Jaap de Jonge
Editor, Netherlands

Innovations/Substitutes in 5 Forces Analysis and Alternative Models

The Threat of Substitutes is one of Porter's 5 forces determining the value or attractiveness of an industry. There are obviously 4 others. Although Porter admitted that the internet has a major impa... 31-8-2022


Definition of a Substitute

A substitute is in consumer theory and business strategy another product or service that can be used for the same purpose by the consumers and take the place of an existing one. Substitution can happ... 1-9-2022


Examples of Substitutes

- More and more people substitute tofu for meat nowadays as they use tofu instead of meat. - Video conferencing tools like Skype or Teams or Zoom can be substitutes for business traveling/flying. - ... 1-9-2022


Factors in Substitution

The risk of substitution can be considered high when: - Switching costs for consumers are relative low. - Consumers are not very loyal and their price sensitivity is high. - The perceived performan... 1-9-2022


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