Question

The pharmaceutical industry is extremely dynamic. A company that releases a product to the general public with the intention of keeping prices high may see quick competition arising from other products made from different compounds that perform the same functions as the company's product. According to the five forces model, this type of threat is called _____.
a. the level of rivalry among organizations in an industryb. the potential for entry into an industryc. the power of large suppliersd. the power of large customerse. the threat of substitute products

Answer 1

Answer: Threat of substitutes products

Explanation: Substitute goods refers to those goods which can be easily used in place of one another. In case of these goods, when the price of one rises the demand for other rises.

In the given case, the firms in pharmaceutical industries cannot increase the price of their products as there are other easy alternatives available.

   Hence the correct answer is threat of substitutes.