Respuesta :
A mining company develops a new processing technique using only light and patents the process. This situation is characterized by low threat of substitutions.
A substitute product is one that might provide a company with the same or similar advantages as a product from a different industry. The risk that a company has from being replaced by its substitutes is known as the threat of a substitute. The threat is always greater for more generic, undifferentiated products than for products with more distinctive features. When there are numerous readily available alternatives, a company's ability to establish pricing and decide how to market its goods is severely limited.
One of the factors influencing the competitive structure within an industry, according to Porter, is this threat. It has a significant impact on business and industrial profitability. There will be less competition among the existing businesses and more opportunity to generate better profits if the danger of alternatives is low.
Product Price: - If alternatives are more affordably priced, there may be a greater chance that customers will switch brands. Additionally, it may limit how much a business can raise the price of its own goods. Any attempt to charge more than equivalent products could result in consumer churn and lost revenue.
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