Price competition is the easiest type to match and the most destabilizing. Buyers bargain for lower prices, higher quality, or more service. They encourage competition by pitting rivals against one another. Bargaining for higher input prices Suppliers can raise prices or reduce quality. They affect profitability and competition in an industry by increasing its costs.
New competitors come into the industry New entrants add competitive resources to an industry.
They can bid down prices and increase costs, reducing profitability for every company in the industry. The likelihood of new entry depends on the barriers to entry and the threat of retaliation. New products replace established ones Substitutes are other products that perform the same functions as an industry's products. They affect competition by limiting the prices an industry can charge. You must make a judgment about the affect of each of the forces on the industry.