Threat of Substitutes

This is a type of new entry threat.

Substitutes are new products or services which render the organisation’s existing products or services obsolete (for example ball point pens significantly reduced the market for fountain pens). Substitute threats often come from outside the traditional market place, making them difficult for organisation’s to predict (for example demand for slide rules dropped with the introduction of hand held calculators while demand for calculators dropped with the introduction of mobile phone applications).

Threat of substitutes is a term normally found in strategic management and performance management.

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