Midterm Notes 1

Midterm Notes 1 - Porters 5 Forces The threat of substitute...

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Porters 5 Forces The threat of substitute products The existence of substitute products outside of the realm of the common product competitors which increases the propensity of customers to switch to alternatives buyer propensity to substitute relative price performance of substitutes buyer switching costs perceived level of product differentiation The threat of the entry of new competitors Profitable markets that yield high returns will draw firms. This results in many new entrants, which will effectively decrease profitability. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards a competitive level ( perfect competition ). the existence of barriers to entry ( patents , rights, etc.) economies of product differences brand equity switching costs or sunk costs capital requirements access to distribution absolute cost advantages learning curve advantages expected retaliation by incumbents
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Midterm Notes 1 - Porters 5 Forces The threat of substitute...

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