MCQ - Single CorrectAirlines are known to have very low network effects in customer demand. In fact, the same customers often take an Indigo flight on one day and a SpiceJet flight on another day. What impact does this have on the threat of new entrants in the industry?It decreases the threat of new entrants in the airline industry.It has no effect on the threat of new entrants in the airline industry.It increases the threat of new entrants in the airline industry.Cannot be said
Question
MCQ - Single CorrectAirlines are known to have very low network effects in customer demand. In fact, the same customers often take an Indigo flight on one day and a SpiceJet flight on another day. What impact does this have on the threat of new entrants in the industry?It decreases the threat of new entrants in the airline industry.It has no effect on the threat of new entrants in the airline industry.It increases the threat of new entrants in the airline industry.Cannot be said
Solution
The fact that customers often switch between different airlines indicates that there is low customer loyalty and high competition in the airline industry. This scenario suggests that customers are likely to try a new airline if it offers competitive prices, routes, or services. Therefore, this situation increases the threat of new entrants in the airline industry. So, the correct answer is:
"It increases the threat of new entrants in the airline industry."
Similar Questions
MCQ - Single CorrectPlayers in the Indian smartphone industry release new models every few months in an attempt to ensure that their products stay on top. This means that once a new model is released, the demand for older models significantly drops. How is this expected to impact the competitive rivalry within the industry?It is expected to decrease the competitive rivalry within the smartphone industry.It is expected to increase the competitive rivalry within the smartphone industry.It has no effect on the competitive rivalry within the smartphone industry.Cannot be said
By conducting industry analysis for the U.S. airline from the module, here is a summary of the findings - Threat of new entry - StrongSet up complex but capital costs lowRetaliation by incumbents a key barrierBuyer power - WeakRetailers - few big retailers (e.g. Expedia, AmEx) but mostly smaller.Some big customers (e.g. large corporations)Customers price sensitiveIndustry rivalry - StrongExcess capacityHigh creation of fixed to variable costs (95%)High exit barriers (protection by chapter 11 - United, Delta, US airways)Long-lived assets (aircraft)Concentration (fairly high)Product difference (low)Threat of substitute - WeakOther modes of transportAlternatives to face-to-face meetingsSupplier power - StrongLabour unions (pilots, engineers)Aircraft manufacturersAirportsWhat does this analysis mean? Group of answer choicesThis industry players have high bargaining power over its suppliers.The industry players have low bargaining power of its buyers.This industry is very profitable.This industry is not profitable.
MCQ - Single CorrectIn the 1950s, the cost of owning a television in the US started to drop. What effect, according to you, did this have on radio manufacturers?They experienced a higher threat of substitution.They experienced a lower threat of substitution.Their threat of substitution did not change in any way.Cannot be said
MCQ - Single CorrectUnder which of the following conditions is the strategic group analysis an effective tool for analysing the industry environment? Different range of product linesSimilar distribution channelsOffering a wide range of product attributesNone of the above
Fill in the Blank QuestionFill in the blank question.Network effects may drive a market toward , because consumers tend to choose standard products that everyone else is using.
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