CAF-7 · Chapter 4 · Question 3 of 15
Which of the following scenarios best exemplifies a situation where the 'Threat of Substitutes' is the most significant force affecting industry profitability?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) A traditional taxi service loses 35% of its customers to a new app-based ride-hailing competitor
Explanation
A substitute is a different product or service that satisfies the same customer need. An app-based ride-hailing service is a substitute for traditional taxis, taking away their market share based on convenience or price.
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