The correct answer is: The threat of substitute products/services.

IT is a particularly fertile field for the development of substitute products. These can have a significantly adverse effect on competitors.

Examples include the following:

e-books replacing the paper format

MP3 music downloads to replace CD's and cassettes

Picture and videophones to replace cameras.

From a strategic perspective, it is important that organisations are aware of the threat of substitutes and identify strategies to react to them. In the music industry for example, the reaction of the key players is to make their music available through their own websites to counteract the influence of other sources.