(5)The

Threat of SubsGtute Using Industry Analysis: A Few

Products and Services Caveats
Substitutes limit the potential returns of an Managers must not always avoid low profit
industry industries
Can still yield high returns for players with sound
Ceiling on the prices that firms in that industry
strategies
can profitably charge
Implicitly assumes a zero-sum game,
Price/performance ratio determining how a firm can enhance its position
relative to the forces. The fact of complements.
Five Forces analysis is essentially a static
analysis.

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Strategic Groups within Industries The World Automobile Industry:

Strategic Groups

Two unassailable assumptions in industry

analysis
No two firms are totally different
No two firms are exactly the same
Strategic groups
Cluster of firms that share similar strategies
Breadth of product and geographic scope
Price/quality
Degree of vertical integration
Type of distribution system

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