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Substitute products or services can limit an industries profitability by putting a cap on prices. If an industry fails to differentiate from substitutes through one of the 3 above factors, substitutes will threaten profitability. [4] Factors influencing the threat of substitutes include:
There has been a study over employee wages at the fast food companies, the study suggests the fast food industry needs to increase an hourly payment from "7.25 to 10.25" for the beginners of the job. Besides, they recommend to rise that to 5 dollars after few years of experience. [ 45 ]
A graphical representation of Porter's five forces. Porter's Five Forces Framework is a method of analysing the competitive environment of a business. It draws from industrial organization (IO) economics to derive five forces that determine the competitive intensity and, therefore, the attractiveness (or lack thereof) of an industry in terms of its profitability.
Monopolistic competition, a type of imperfect competition where there are many sellers, selling products that are closely related but differentiated from one another (e.g. quality of products may differentiate) and hence they are not perfect substitutes. This market structure exists when there are multiple sellers who attempt to seem different ...
In microeconomics, substitute goods are two goods that can be used for the same purpose by consumers. [1] That is, a consumer perceives both goods as similar or comparable, so that having more of one good causes the consumer to desire less of the other good.
The fast-food industry has been wringing its hands over the devastating impact on its business from California's new minimum wage law for its workers. Their raw figures certainly seems to bear ...
Fast food was created as a commercial strategy to accommodate large numbers of busy commuters, travelers and wage workers. In 2018, the fast-food industry was worth an estimated $570 billion globally. [1] The fastest form of "fast food" consists of pre-cooked meals which reduce waiting periods to mere seconds.
Monopolistic competition characterizes an industry in which many firms offer products or services that are similar, but not perfect substitutes. Barriers to entry and exit in a monopolistic competitive industry are low, and the decisions of any one firm do not directly affect those of its competitors. [ 16 ]