Question

Many people who do not buy health insurance are not exactly uninsured. Some make the conscious choice to accept the risk of being uninsured because their form of health insurance is cheaper and more fun. They piece together a fitness club membership with a trainer, regular visits to a chiropractor and use Minute Clinic when they need medical assistance. this is an example of:

		The threat of competitive rivals
		The power of buyers
		The threat of new entrants
		The threat of substitutes

Answer 1

As per Porter's five forces principle, it is the Power of Substitute.

There is no threat of competitive rivals in this case. It is caused when any there is large number of companies providing a similar product and reducing the bargaining power of the firm. This is not happening here. But the consumer has several options.

The power of Buyers is a condition which is decided by how many buyers or customers the company has and how much it will take for the customer to switch to a new supplier. The leas that cost is the higher power the customer has to drive the price down for the service or the good.  

The third option is the threat of new entrants: It is not present here. NO new companies are entering the market.

The fourth option is the substitute: Visiting Gym and doing things on their own is a viable alternative to the health insurance. Here the consumer has just switched the task to their own manual choices and they are doing things on their own. Keeping themselves health and avoiding any need of insurance itself.