Read industry structure
Define the industry by customer substitution, then examine who can capture the value. List the alternatives customers can switch to and the suppliers, buyers, rivals and entrants that affect terms.
Worked example
A regional pet food supplier may face few local manufacturers yet still have weak bargaining power. Clinics can stock competing brands, and customers can buy online. Those alternatives constrain pricing even without a nearby factory.
Change the assumption
A clinic asks for a larger discount after a popular online brand arrives. Which force should you examine first?
Check the reasoning
Test whether the clinic has a credible alternative and could actually move its customers. That is buyer bargaining power. Online substitution may strengthen it, but the size of the threat depends on switching.
Check your reasoning
Would adding more suppliers always improve the brand’s position?
Reveal the explanation
Only if the suppliers are credible substitutes at comparable quality and lead times. Count usable alternatives and the cost of switching.
Try the same framework in a different case
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