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Under Porters Five Forces, what does the threat of substitute products mean?

The substitute of goods or services they can be used in place of a company’s product or service will also pose a threat. Companies that produce goods or services for which no substitutes exist will have the power to increase price points and locking better terms of the deal.

On the other hand, when many substitutes are available, customers will generally be able to dictate purchasing power. Buyers may have limits on the maximum price they are willing to pay if there are readily available substitute products.


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