CIPS L4M6 Exam - Topic 3 Question 57 Discussion

Actual exam question for CIPS's L4M6 exam

Question #: 57
Topic #: 3

A competitor develops an alternative type of vacuum cleaner to one produced by your organization. Is this an example of the threat of substitutes, one of the five forces of competition described by competitive forces theory?

AYes, customers may switch to alternative products

BYes, there are no barriers to entry; it is an oligopoly

CNo, it does not serve the same purpose

DNo, it is a threat from a new entrant to the market

Show Suggested Answer

Suggested Answer: B, C

The correct answers are information sharing and trust. Further qualitative KPIs are listed on p.102. Deliveries in full and on time would be a quantitative KPI and early supplier involvement is not a KPI at all.

by Noel at Jan 12, 2025, 04:09 PM

Limited Time Offer

25%

Off

Get Premium L4M6 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Scarlet

6 months ago

Yes, customers will switch if they find something better!

upvoted 0 times

...

Santos

6 months ago

Not sure, but it seems like they serve different needs.

upvoted 0 times

...

Teddy

6 months ago

Surprised this is even a question, of course it's a substitute!

upvoted 0 times

...

Peter

7 months ago

I think it's more about new entrants than substitutes.

upvoted 0 times

...

Gabriele

7 months ago

Definitely a threat of substitutes, people love options!

upvoted 0 times

...

Tomas

7 months ago

I agree with the first comment. If people can switch to a different vacuum cleaner easily, it seems like a classic case of substitutes.

upvoted 0 times

...

Yen

7 months ago

This reminds me of a practice question where we discussed how new entrants can affect competition, but I feel like this is more about substitutes.

upvoted 0 times

...

Arlie

7 months ago

I'm not so sure, though. I remember something about substitutes needing to serve the same purpose, but I can't recall the details.

upvoted 0 times

...

Gene

8 months ago

I think this is definitely about the threat of substitutes since customers can choose different vacuum cleaners.

upvoted 0 times

...

Daniel

8 months ago

I think the key here is whether the alternative vacuum cleaner is truly a substitute product. If it serves the same purpose, then A seems like the right answer. But if it's a fundamentally different type of product, then C might be more accurate.

upvoted 0 times

...

Van

8 months ago

I'm not totally sure about this one. I'd want to look more closely at the definition of the threat of substitutes to see if it really applies in this case. The wording is a bit ambiguous.

upvoted 0 times

...

Casandra

8 months ago

I'm pretty confident this is an example of the threat of substitutes. Customers can easily switch to the alternative product, so that seems to fit the definition.

upvoted 0 times

...

Nan

8 months ago

Hmm, I'm a bit confused on this one. I'm not sure if the threat of substitutes is the right concept to apply here. Maybe it's more about new entrants to the market?

upvoted 0 times

...

Lenora

8 months ago

I think this is a tricky one, but I'm leaning towards A. The key is whether the alternative vacuum cleaner can serve the same purpose as the one produced by the organization.

upvoted 0 times

...

Man

1 year ago

Ha! Alternative vacuum cleaner? What, is it like a Roomba but also does the dishes? I'd be careful with that one, it might just suck up your entire kitchen!

upvoted 0 times

Chantay

11 months ago

We should keep an eye on it and see how it impacts our market share.

upvoted 0 times

...

Theron

11 months ago

I agree, if it can do more than just vacuum, it could definitely pose a threat to our product.

upvoted 0 times

...

Argelia

11 months ago

Haha, that would be something! But yeah, it sounds like a potential threat of substitutes.

upvoted 0 times

...

Willodean

1 year ago

I'm not sure about that. Doesn't the question mention that the competitor's vacuum cleaner is 'alternative'? Doesn't that mean it might not serve the same purpose? I'd go with C - No, it does not serve the same purpose.

upvoted 0 times

Leonora

12 months ago

C) No, it does not serve the same purpose

upvoted 0 times

...

Dorthy

12 months ago

B) Yes, there are no barriers to entry; it is an oligopoly

upvoted 0 times

...

Leota

1 year ago

A) Yes, customers may switch to alternative products

upvoted 0 times

...

Hailey

1 year ago

I agree with Phuong. This is a classic case of the threat of substitutes, where a competitor's product can potentially replace the one produced by the organization.

upvoted 0 times

Jamal

12 months ago

A) Yes, customers may switch to alternative products

upvoted 0 times

...

Luisa

12 months ago

B) Yes, there are no barriers to entry; it is an oligopoly

upvoted 0 times

...

Elli

1 year ago

A) Yes, customers may switch to alternative products

upvoted 0 times

...

Phuong

1 year ago

The correct answer is A. The development of an alternative vacuum cleaner is definitely an example of the threat of substitutes, as customers may switch to the competitor's product.

upvoted 0 times