The aircraft industry has long been dominated by two large aircraft manufacturers, Boeing and Airbus. The demand for major aircraft is low, and Boeing and Airbus aggressively compete for orders from airlines. What effect will these conditions have on the domestic airline industry?

a. It will make the airline industry more attractive because of decreased supplier power.

b. It will make the airline industry less attractive because of decreased supplier power.

c. It will make the airline industry more attractive because of increased supplier power.

d. It will make the airline industry more attractive because of a new entrant.

Question

Business

Cierra Olsen

16 July, 10:33

The aircraft industry has long been dominated by two large aircraft manufacturers, Boeing and Airbus. The demand for major aircraft is low, and Boeing and Airbus aggressively compete for orders from airlines. What effect will these conditions have on the domestic airline industry?

a. It will make the airline industry more attractive because of decreased supplier power.

b. It will make the airline industry less attractive because of decreased supplier power.

c. It will make the airline industry more attractive because of increased supplier power.

d. It will make the airline industry more attractive because of a new entrant.

+2

Answers (2)

Know the Answer?

Kayleigh Hahn · Answer 1

The correct answer is letter "A": It will make the airline industry more attractive because of decreased supplier power.

Explanation:

There are five (5) forces driving business according to American Harvard Business Professor Michael E. Porter (born in 1947) : Competitive Rivalry, Supplier Power, Buyer Power, Threat of Substitution, and Threat of New Entry. Supplier Power involves the influence providers of goods or services have in the industry to change the price of their products. Frequently, they gain power when there are more suppliers than customers, or when suppliers are willing to unite.

While Boeing and Airbus compete on the aircraft market, they have little power supply that can draw investors interested in participating in the domestic flights market.

Marlee Green · Answer 2

a. It will make the airline industry more attractive because of decreased supplier power.

Explanation:

In the aircraft industry the demand for major aircraft is low, so there will be excess supply of the service by Boeing and Airbus.

The two major players will need to come up with strategies to get their market share.

The competitive environment in the airline industry will result in opportunities for other players that will want to come in.

If there was market dominance by one of Boeing or Airbus, entry will be limited for new businesses in the non-competitive market.

Supplier power is low so there is no monopoly in the market.