A. Examine the U.S. passenger airline industry using the Five Forces. Is this an attractive industry? Why or why not? (Discuss: Supplier Power; Buyer Power; Substitutes; Rivalry; Entry)
Explain your answer.
B. Clear Channel, an owner of multiple radio stations with the Top 40 format, recently bought rock concert promoter Live Nation. How would this affect prices for concert tickets or rates for radio programming?
According to Michael Porter’s Five Force model, the best industries are characterized by:
Low threat of entry (high barriers to entry)
Low buyer power
Low supplier power
Low threat from substitutes, and
Low levels of rivalry between existing firms.
One can examine the U.S. passenger airline industry using the Five Forces, to determine whether or not this is an attracting industry.
Low threat of entry (high barriers to entry)
The airline industry is highly competitive and barriers to entry are low due to liberalization of market access, a result of globalization.
Low buyer power
Customers have a high bargaining power since the industry deals with a perishable product with limited options to differentiate their services from competitors’ products. Passengers, especially those traveling for leisure purposes, are highly price-sensitive.
Low supplier power
The air transport supply chain consists of aircraft manufacturers, lessors, air navigation service providers (or ANSPs), travel agents, and freight forwarders. The supply chain also includes providers ofother services such as computer reservation systems (or CRS), catering, ground services, and maintenance, repair, and overhaul (or MRO). Airline suppliers generate higher returns compared to airlines
Low threat from substitutes
Substitutes include traveling by car, boat, train, bus, private jet, or not traveling at all.
Additionally, customer loyalty plays a part in a threat. Just becausea new airline is available, doesn’t mean customers are willing to switch from an airline they are already loyal to.
Lowlevels of rivalry between existing firms
High level of rivalry. According to IATA (International Air Transport Association), about 1,300 new airlines were established in the last 40 years.
Based on the information using the Five Forces, the U.S. Passenger airline industry is not an attractive industry. In order to be an attractive industry by the Five Forces, there must be a low threat of entry, low buyer power, low supplier power, low threat of substitutes, and low levels of rivalry between existing firms. The U.S. Passenger airline industry has low barriers to entry, high customer bargaining power, high supplier power, several substitutes, and a high level of rivalry.
B. As a result of this acquisition, Live Nation will now receive exposure to various parts of the country as a result of Clear Channel owning a diverse Top 40 line up. This will result in an increase in prices of tickets due to a rise in the demand for the concert ticket.
A. Examine the U.S. passenger airline industry using the Five Forces. Is this an attractive industry?...
Economics A. Examine the U.S. passenger airline industry using the Five Forces. Is this an attractive industry? Why or why not? (Discuss: Supplier Power; Buyer Power; Substitutes; Rivalry; Entry) B. Clear Channel, an owner of multiple radio stations with the Top 40 format, recently bought rock concert promoter Live Nation. How would this affect prices for concert tickets or rates for radio programming?
Examine the U.S. passenger airline industry using the MP's Five Forces model. Is this an attractive industry? Why or why not? Please explain.
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Understanding possible entry barriers is most important when analyzing which of the industry forces? Threat of competitive rivalry Threat of suppliers Threat of new entrants Threat of buyers Threat of substitutes Which of the following is not a condition that makes suppliers of an industry more powerful? A) There are a high number of suppliers. B) The industry is not important to the supplier group. C) There are high switching costs for firms in the industry to switch from current...