The force of replacements was selected as a crucial element among Porter’s five forces. It is very difficult for a product to be the sole option for consumers. Companies as powerful as Apple, Inc. have several rivals in the industry. Although many individuals prefer iPhones to other brands of mobile phones, a new option might emerge if a user-friendly alternative with a highly appealing price becomes available (HBS, n.d.) from Samsung since customer loyalty cannot be measured financially. Manufacturers can only continue to improve their goods in order to remain competitive. In highly dynamic marketplaces, substitutes will have more influence; as a result, several active rivals are vying for victory and greater earnings. In this situation, replacements will be far more prevalent than in a market with a low dynamic. This will result in a competitive market, and earnings from previous items may continue declining.
Government legislation might significantly impact these five forces. First, the government might determine entry barriers, which could raise or reduce the number of competitors in a certain sector. In addition, the government might choose the potential providers. Alternatively, if the hurdles to entry are high enough, it may be impossible for replacements to develop, which is considered a monopoly. The purchaser force is the force that the government can restrict the least because consumers only purchase necessities. However, if the government creates a demand among the populace, the purchasing power may be phenomenal. This could be seen in the recent example of the covid pandemic, where the mandate on the wearing of masks has increased the demand for the product to unbelievable heights globally. This situation is a direct demonstration of how the government stimulates growth within the nation.
Reference
Harvard Business School (HBS). (n.d.). The Five forces. Institute For Strategy And Competitiveness. Web.