Threat Of Substitutes For Fice Supply Industry

Substitutes: The threat of substitutes is high. The threat of online apparel stores has the potential of destroying the traditional retail industry business model (Bandt, 2000). The ecommerce platforms allow retailers expand their consumer base across national and global markets with lower capital requirements and improved efficiency.

The threat of substitute products is low to Caterpillar. This is due to organisation’s use of the most efficient technology for the associated cost of operations. There is no other viable option for buyers to consider the task to be completed in a resourceful and more timely manner.

The threat that substitute products pose to an industry's profitability depends on the relative price-to-performance ratios of the different types of products or services to which customers can turn to satisfy the same basic need. The threat of

The different types of equipment in the office are computer, fax machine, franking machine, photocopier, printer and scanner.

Threat of Substitute Products and Rivalry Among Competitors- these two forces are closely related. In marketing, the word “product” means more than a good, service or idea. Product is a broad concept that also encompasses the satisfaction of all consumer needs in relation to a good, service or idea. All planning strategies have the goal of creating a sustainable competitive advantage in which other companies simply cannot provide the same value to their customers that the firm does, no matter how hard they try. When a national chain retailer has a competitive advantage with a product, it must take steps to safe guard that product to stay different and unique in the marketplace. For example, Macy’s is the exclusive retailer for Martha Stewart home lines and is currently in a legal battle with JCPenney who announced that they will carry that line as well.

The retail industry is saturated with substitutes, in part to low entry barriers. Online shopping and small boutiques stocking similar lines, brand names and designs provide David Jones potential customers with many substitutes. It is the David Jones experience that cannot be substituted; shopping in a large, upmarket department store. For the sector, substitutes are low.

Changing technology may affect the demand for a firm’s products and services but on the other hand due to technology businesses can have systems that provides faster services like the retail businesses have systems that does stock control, cash and customer service.

Businesses are not only faced with competition within the industry they operate in. They also face competition from businesses in other industries.

Threat of Substitutes: Few substitutes such as bars for hard liquor, restaurant for food, etc. The threat is low because product sold depends upon customers taste and preference and there is minimal product differentiation.

Substitutes for Products: There are various options available at each stage. You have broad range of technologies to choose from. Take for example the pre-cooling stage; you have five methods – vacuum cooling, forced air cooling, hydro cooling, icing and room cooling. Each method involves a different set of suppliers and the company can choose amongst each method depending on its capital budget. Similar trends exist in the other two stages and therefore, the company enjoys a higher bargaining power.

2.3 THREAT OF SUBSTITUTES Substitutes do not entirely replace existing products but may introduce new technology or reduce the costs of producing the same product (Porter, 1980). Substitutes may limit the profits in an industry by keeping their prices down (Porter, 1980). The threat of substitution is quite high in this industry because consumers are able to substitute to other major retailers, convenience stores, niche product outlets, restaurants, bakeries, butchers and farmers (Coriolis Research, 2004). Supermarkets like Tesco and ASDA have a range of products and services that have close substitutes, effecting price elasticity of demand because the market is sensitive to price (IBISWorld). The demand for a particular brand or retailer will increase or decrease concurrent to the movement of price in comparison to its competition (IBISWorld). The UK supermarkets are always trying to increase the quality of products and services resulting in a constant need to differentiate products and services from competition to make them less price sensitive.

Relative price performance of substitutes is the price of substitutes for your output compared to the price you are charging. If the price of substitutes is lower, the competitive threat increases as the price differential increases. For example, there are many more companies existing in the market providing same medicine with the same formula but different Name. These medicines are treated as substitutes by the several medical practitioners.

Staples was founded by two gentlemen, Tom Stemberg and Leo Kahn that were ready to start a new business adventure in the office supply industry. Both men had worked in the retail industry, and was open to building a company with a design twist of “Toys R Us”, which would be a business model structure into an office chain supply company that would service smaller business owner. According to Alan (2009) the business idea was created by Tom Stemberg from the concept being able to supply consumer with office supply at the best price. Due to financial situations Mr. Stemberg incorporate a business partner by the name of Leo Kahn that could supplied the company with the started up funds of $500,000,which, is a remarkable investment being that the company due more than $11.6 billion in sale (Alan, 2009).

The threat of substitutes: where it refers to substitute product as those that are available in other industry which can also fulfil the need and want of the consumers. It can affect competition in an industry by placing an invisible ceiling on prices which companies within the industry can charge, due to the fact that if the cost of substitute is low then the consumers will tend to purchase substitutes, therefore limiting the prices that a company can place on certain items to gain maximum profit. For example, lemonade can be substituted for a soft drink. Generally, competitive pressures arising from substitute products increase as the relative price of substitute products declines and as consumer 's switching costs decrease.

The threat of substitutes is high when differentiation of the substitute product is high, and people could buy other similar products by the same or cheaper price. There is also a high threat of substitute when the rate of improvement in price-performance relationship with