Question

The definition of a Substitute is a product outside of the focal industry that serves the same purpose as the products in the focal industry.

This means that the substitutes have to be outside of the industry, describe the entire process for determining substitutes. Number each of your steps.

Answer 1

The process for determining substitutes involves several steps, including identifying the focal industry and potential substitutes, evaluating their suitability, analyzing the impact on demand, and considering the overall market structure.

Step-by-step explanation:

The process for determining substitutes involves several steps:

1. Identify the focal industry and the products within it.
2. Identify potential substitutes for these products that serve the same purpose.
3. Evaluate the substitutes to determine if they are outside of the focal industry.
4. Analyze the characteristics and capabilities of the substitutes to assess their suitability.
5. Consider the impact of substitutes on demand for the products in the focal industry, such as changes in price and quantity demanded.
6. Use graphical analysis, such as demand curves, to visualize the relationship between substitutes and the products in the focal industry.
7. Consider the effect of substitute goods on the overall market structure and competitiveness.