Explain the difference between Treat of Substitutes and Competitive rivalry?

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Surajit Rudra asked 11 months ago

Can someone explain the difference between Treat of Substitutes and Competitive rivalry? Both looks the same.

Elaborating my query, if the threat of entry increases then more companies will enter. As a result, customers will have more options and can easily substitute a company and rivalry within ventures will increase. So I think competitive rivalry and Threat to substitutes are almost the same. Please explain the difference.

2 Answers
Rajesh answered 11 months ago

Yes is almost same, In Threat of substitute the loss cost of product in the Company is almost less but in a Competition Rivalry, lossing cost of the company is high with compare to small substitute of company.
The threat of Substitute:  Low switching cost
Competitive Rivalry: High switching cost

Vinod Kumar answered 11 months ago

The threat of substitute is the weather there is a substitute for your product like milk powder is a substitute for dairy milk. Competitive rivalry is another company offering the same product as yours like mother dairy (milk) is a competitive rivalry for Amul (milk).
Hope you understood.

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