Research Threat of Substitutes: Competition in the Market (Essay Sample)

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Threat of Substitutes
According to Porter, the threat of substitutes is the defining force behind the competition witnessed in any industry. Firms have to be on their heels in a bid to counter any moves by competitors that can pull away customers. Porter defined substitute products as those that originate from a different industry, and can be used to satisfy and unleash utility to the consumer just like the industry product. Depending on the behavior of consumers and the substitutability of the product at hand, Porter categorizes the threat as high or low. In cases where the threat is high, there is need for the industry players to remain vigilant in addressing the needs of consumers, and this includes fair pricing (David and Mahnovski 2003). Liftstyle Lift Company operates in a lean environment, offering a product that can be easily acquired in a different setting. Plastic surgery clinics and doctors are found in several places.
Interestingly, the nature and availability of customers in this sector is highly dependent on satisfaction and resultant referral. In other words, the business environment is very delicate. The nature of the product is one that may affect the consumer for the rest of his or her life, and this is fundamental on the company making decisions on how to operate and set policies. The threat here can be described as high, and successfully sets a scenario of stiff competition.
Business should ensure when planning and coming up with strategies, they should also consider having a plan on how to consider and understand and cope with availability of competitors in the market. Therefore, they can be able to consider the level of competition in the market by understanding all the forces of competition; suppliers, customers, substitute goods and possibilities of new similar businesses in the market. This forces therefore, create the level of rivalry in the market. However, for business organizations to ensure that they remain relevant, they have to have a well organized structure. Meaning, if a business sets its goals and structure in relation to the level of competition, the business profitability will remain medium in the long run.
The entrance of new business in the market, is a major challenge to profitability of an existing organization(s), therefore there is need for the existing organization to consider holding down their prices or put more investments for them to discourage new competitors. The more there are entry barriers into the market, the less threat the existing organization(s) will experience from new entrants. A major way that an existing competitor can deter new competitors is through production of large amounts of supply, to apply the advantage of economies of scale Through this, the existing competitors will pose a threat to the aspiring entrants since they will be expected to enter the market with large production of their products, and this could be a serious cost disadvantage.
Lifestyle lift has experienced a positive reaction from its previous customers who believe in their service, perhaps from what they has seen other customers who had experienced the same services. From the current industry, the company seems to more competition due to the fact of increasing it level of losses comparing the year 2011 and year 2012. This is a clear indication that more people were opting for the quicklift procedure to the lifestyle lift.
Lifestyle lift experiences more competition in the broader industry from competitors like from the Quicklift services. This proves to b...