Which of the following is true if the threat from substitutes is strong?
A)Competitors' products are of a lower quality.
B)Competitors are yet to overcome the entry barriers.
C)Customers are likely to switch to competitors' products.
D)Prices of competitors' products are higher.

Question

Quizplus · Accepted Answer

If the threat from substitutes is strong, customers are more likely to switch to competitors' products that serve the same purpose, which makes the demand for the company's products decrease, resulting in lower revenues and profits. Competitors' products being of lower quality or their prices being higher may not necessarily be true. Entry barriers have little to do with the threat of substitutes.

Which of the Following Is True If the Threat from Substitutes