ExpertMedium2 marksMultiple Choice
ACCA · Question 04 · Business & Technology
Section A
"Solaris" manufactures residential solar panels. Recently, a breakthrough in cheap, residential geothermal heating systems has entered the market, offering homeowners an alternative way to generate clean energy.
In the context of Porter's Five Forces, which force is primarily increasing for Solaris?
Section A
"Solaris" manufactures residential solar panels. Recently, a breakthrough in cheap, residential geothermal heating systems has entered the market, offering homeowners an alternative way to generate clean energy.
In the context of Porter's Five Forces, which force is primarily increasing for Solaris?
Answer options:
A.
Bargaining power of buyers
B.
Threat of new entrants
C.
Competitive rivalry
D.
Threat of substitutes
How to approach this question
Identify if the new product is in the same industry or a different one fulfilling the same need. Different technology = substitute.
Full Answer
D.Threat of substitutes✓ Correct
Porter's Five Forces includes the Threat of Substitutes, which occurs when products from outside the industry offer a similar benefit to the consumer. Geothermal heating is a substitute for solar panels.
Common mistakes
Confusing 'Threat of new entrants' with 'Threat of substitutes'.
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