All about Five Forces (Porter) | Five Forces Analysis
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Substitution in the Five Forces Model
PRASAD SN, Professor, India, Member
I am interested in '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 makes the product or service obsolescent / redundant is more important today as compared to all other forces put together, because the time frames for new inventions and discoveries to take place has come down. Can we call it an increase in the rate of evolution of the mankind?
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Inventions or Substitutes Make new Rules, They don't Follow old Rules
Jagdish B Acharya, Consultant, India, Premium Member
When a substitute or invention comes, it changes the paradigm and new rules or models are born or searched. It is difficult to find models which may explain substitutes or inventions. But see: Disruptive Innovation. Simple substitute is increase in supply which may follow rules but real innovative substitutes cannot be explained, generally. Case to case treatment must be done based on nature of substitution.
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Porter's Five Force and Substitutes
Satriyo Dharmanto, Deputy ICT Director, Indonesia, Member
It's a very useful tool that can be used to make significant analysis of our industry, in the combination with any other related tools. Regarding the threat of substitutes, I personally think that new technology development is a substitutes parameter that can be considered to provide answers, towards current turbulent economic condition
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