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Bus 640

In: Business and Management

Submitted By viance88
Words 1005
Pages 5
1. Choose one of the following three industries (NOT specific companies) for analysis:

. Airlines (carriers) . Automobiles . Personal computers.

RATE (not Rank) the global importance of each of Porter’s five industry forces on a scale of 1 to 5 (1 = Low, 5 = High), and provide at least two reasons for each rating. In addition, list at least three industries that complement the industry you choose. (30 points)

Airlines Industry 1. Oil Service Industry- Fuel airplanes, and shuttle-bus. 2. Banking Industry- Some airline have their own credit union and others rely on banks for reward sky miles. 3. Insurance Industry- Employee insurance.

Rate 4
Threats of New Entrants. At first glance, you might think that the airline industry is pretty tough to break into, but don't be fooled. You'll need to look at whether there are substantial costs to access bank loans and credit. If borrowing is cheap, then the likelihood of more airliners entering the industry is higher. The more new airlines that enter the market, the more saturated it becomes for everyone. Brand name recognition and frequent fliers point also play a role in the airline industry. An airline with a strong brand name and incentives can often lure a customer even if its prices are higher (Investopedia, 2012).

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Powers of Suppliers. The airline supply business is mainly dominated by Boeing and Airbus. For this reason, there isn't a lot of cutthroat competition among suppliers. Also, the likelihood of a supplier integrating vertically isn't very likely. In other words, you probably won't see suppliers starting to offer flight service on top of building airlines. (Investopedia, 2012).

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Powers of Buyers. The bargaining power of buyers in the airline industry is quite low. Obviously, there are high costs involved with switching airplanes, but also take a...

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