The paper aims at discussing porters five models to show the strength that different firms in various market structures have to counteract the forces in the market. The forces that firms has to counteract in order to achieve competitive advantage include the bargaining power of the customers, the entry of new firms in the market, the bargaining power of suppliers, competition from substitute products and the competition from competitors in the industry.
Substitute refers to the products that can be used in place of the other or the products that can be produced instead of producing the other products. In the actual market situation almost every product has a substitute product. In the economics, the supply is backed by the demand of the product. An increase in demand of a certain product in the market would lead to the increase of price of that product. From the law of supply, increase in price of the product would lead to increase in supply of the good since the high prices of the commodity will make the production of the product attractive to many producers who would in turn produce more of that product thus increase the supply. In the competitive market increase in demand of substitute product would lead to the firm producing more of that product than the other product that has low demand in the market. Land can either be used to produce agricultural product or used in mining.
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