In Mr. Porter’s view , strategy is all about escaping that model of “ perfect competition, ” and instead creating a strong position for your product or service that allows it to garner outsized profits. He cites five key competitive “forces” that will determine the ability of your product or service to achieve a strong strategic position: 1. Entry. How easy is it for others to enter your market ? Do newcomers face significant barriers, or do they expect sharp retaliation from existing competitors? Barriers to entry can include economies of scale, a highly differentiated product, large capital requirements for new entrants, large costs for customers to switch, limited access for newcomers to distribution channels, and government regulations or subsidies. 2. Threat of substitution . Are there other products and services that can easily be substituted for yours? Consider, for instance, what the rise of corn syrup did to the sugar industry, or what the iPod did to the CD business. ...
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