Competitive Pressures from the Sellers of Substitute Items

Question

What are the Competitive Pressures from the Sellers of Substitute Items?

Answer 1

Organization in one industry comes under the competitive pressure from the actions of organization in a closely adjacent industry whenever buyers look for the products of the two industries as good substitutes.

The presence of attractively priced and readily available substitutes create competitive pressure by placing a upper limit on the prices industry members can charge without giving consumers an incentive to switch to substitutes and risking sales erosion.