Halfords is a major bicycle and car parts retailer with long history in the market. Its suppliers are plentiful and there is no threat of forward integration. Some other smaller retailers are applying 3D-printing technology to make personalized bicycle parts but their market share is relatively low. 3D-printing technology is an example of which competitive force?

Halfords is a major bicycle and car parts retailer with long history in the market. Its suppliers are plentiful and there is no threat of forward integration. Some other smaller retailers are applying 3D-printing technology to make personalized bicycle parts but their market share is relatively low. 3D-printing technology is an example of which competitive force?
A . Bargaining power of buyer
B . Threat of substitute
C . Rivalry within the industry
D . New entrants may enter the market

View Answer

Answer: B

Explanation:

3D-printed parts can replace traditional metal parts. They are also more easily customised to fit customer’s needs. This technology is an example of threat of substitute in Porter’s Five Forces model. Substitute goods or services that can be used in place of a company’s products or services pose a threat. Companies that produce goods or services for which there are no close substitutes will have more power to increase prices and lock in favorable terms. When close substitutes are available, customers will have the option to forgo buying a company’s product, and a company’s power can be weakened.

Reference: – CIPS study guide page 85-96

– Porter’s 5 Forces Definition: Analyzing Businesses (investopedia.com) LO 2, AC 2.2