1.5 Literature Review “The basic tool that Porter offers managers in Competitive Strategy and Competitive Advantage (1985) is his rule of the five forces that drive competition in any which sector. The central element is the rivalry of existing competitors in the field, around which potential entrants revolve, the threats of substitutes for the products or services offered and the bargaining power of suppliers and buyers. (Kennedy, 1994) The importance of a firm's strengths and weaknesses ultimately depends on its impact on relative costs or differentiation [which], in turn, arise from industrial structure; the ability of a company to better cope with the five forces. than its rivals (Kennedy, 1994)1. Threats of substitute products from competitors, including product differentiation, the price performance of a substitute, and the ability of a buyer to switch to a substitute. (Investment Answers: Porters Five Forces) It has been relative in the pharmaceutical industry, one would find that there are more generic products. medicines are produced on the market and consumers buy them. For example, one would go to the pharmacy to buy a Panado but would not find it in stock but would be recommended to buy a generic version made up of more or less the same ingredients at a lower price. This ends up presenting the consumer with a less expensive alternative that is as effective as the original, and the company that produces the generic drug gains a competitive advantage over the original manufacturer. But this rarely affects the most established and reputable companies, because while some consumers love a bargain, there are still many more who are loyal buyers who demand the cos...... middle of paper... ..the margins and volumes of the activities, then it holds a lot of power. Here are some reasons why suppliers might gain power: • There are very few suppliers of one that make this product or offer this service • There are no substitutes or generics • Switch to another product (competitive ) is very expensive • The product is extremely important to buyers (they cannot do without it) • The supplying industry has a higher profitability than the purchasing industry. 1.7 Research methodology This quest will be qualitative. Business owners will be identified and permission to interview them will be requested, questions will be asked and a colleague will be invited to do a test interview to gather more information and feedback. When permission for interview is granted by all consenting persons will be interviewed and all information will be recorded in a report..