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Just how strong the competitive pressures are from substitute products depends in part on whether buyers of the industry's product make purchases frequently or infrequently. there are more than five sellers of substitute products. industry members face strong bargaining power from their most important suppliers. buyer costs to switch to substitutes are high or low. the sellers of substitutes have strong brand name recognition and proven technological capabilities.

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Tom

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Step 1/3

Competitive pressures :

Competitive pressures are the external forces and factors that affects a company's competitiveness within its industry. These pressures can include the threat of substitute products, the bargaining power of buyers and suppliers, the intensity of industry rivalry, and the entry of new competitors.

Explanation:

Competitive pressures are external factors and market conditions that affect a company's ability to compete effectively, such as the threat of substitutes, buyer power, and industry rivalry.

Step 2/3

Competitive pressures from substitute products depend on various factors. One important factor is the cost for buyers to switch to substitutes. If these costs are low, it's easier for consumers to switch to alternative products or services, making substitutes a more important competitive threat to the industry. On the other hand, high switching costs make substitutes less attractive and reduce competitive pressure.

So, the correct answer is:

buyer costs to switch to substitutes are high or low.

Explanation:

This factor directly affect the competitiveness of substitutes. High switching costs discourage consumers from adopting substitutes, while low switching costs make it easier for them to switch, increasing competition.

Step 3/3

Examine the other options :

Buyers of the industry's product make purchases frequently or infrequently :

This option is incorrect because the frequency of purchases by buyers does play a role in determining the competitiveness of substitutes but is not as directly related to the cost of switching to substitutes.

There are more than five sellers of substitute products :

This option is incorrect because the number of sellers of substitute products can affect competition among substitutes, but it doesn't directly address the cost of switching to substitutes, which is a more important factor in evaluating competitive pressures.

Industry members face strong bargaining power from their most important suppliers :

This option is incorrect because it is related to the bargaining power of suppliers rather than the competitiveness of substitutes. While supplier power can impact an industry's cost structure, it doesn't directly inform the cost of switching to substitute products.

The sellers of substitutes have strong brand name recognition and proven technological capabilities :

This option is incorrect because it focuses on the brand recognition and technological capabilities of substitute sellers, which can affect consumer preferences but doesn't directly relate to the cost of switching to substitutes.

Explanation:

All these options are incorrect because they do not directly mark the important factor of the cost of switching to substitute products, which is essential in understanding competitive pressures.

Final Answer

The correct answer is:

buyer costs to switch to substitutes are high or low.

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