1.5 Literature Review “The basic tool that Porter offers managers in both competitive strategy and competitive advantage (1985) is his rule of the five forces that drive competition in any industry . The central element is the rivalry of existing competitors in the sector, while potential entrants, threats of substitutes for the products or services offered and the bargaining power of suppliers and buyers orbit around it. (Kennedy, 1994) The importance of the strengths and weaknesses possessed by a company is ultimately a function of its impact on relative costs or differentiation [which] in turn derive from the structure of the industry, result from the ability to a company copes better with the five forces than its rivals (Kennedy, 1994)1. Threats of substitute products from competitors, including product differentiation, price performance of substitutes, and the buyer's ability to switch to a substitute. (Investment Answers: Porters Five Forces) This has been relative in the pharmaceutical industry, you may find that there are more generic medicines on the market are produced and consumers purchase them. For example, one would go to the pharmacy to buy a Panado but instead would not find it in stock but would be advised to purchase a generic version made up of more or less the same ingredients at a lower price. This ends up introducing the consumer to a less expensive alternative that is as effective as the original, and the company producing the generic drug gains a competitive advantage over the original manufacturer. But this rarely affects more established companies that have a respectable background because even though some consumers love a bargain, there are still many more who are loyal shoppers who demand the cost...... half the paper.... ..margins and volumes of sinesses, so it has a lot of power. Below are some reasons why suppliers might gain power: • There are very few suppliers of a product who make that product or offer that service • There are no substitutes or generics • Switching to another (competitive) product is very expensive • The product is extremely important to buyers (they cannot do without it) • The supplying industry has a higher profitability than the buying industry.1.7 Research MethodologyThis research will be qualitative. Entrepreneurs will be identified and asked for permission to interview them, questions will be asked and a colleague will be asked to do a test interview just as a means of gathering more information and input. When permission for interviews is granted by all consenting persons they will be interviewed and all information will be entered into a report.