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.

Why is the price of jetfuel riskier for foreign airlines as compared to U.S. airlines?

Which of the following conditions generally raise the barriers to entering an industry?Multiple Choicelow levels of brand loyalty on the part of customers and the presence of more than 20 rivals in the industryrapid market growth, low buyer switching costs, and weak brand preferences and customer loyaltyproduct offerings that are pretty much standardized from rival to rivalhigh capital requirements, difficulties in building a network of distributors-retailers and securing adequate space on retailers’ shelves, and the likelihood that industry incumbents will strongly contest the efforts of new entrants to gain a market footholdThe industry is not characterized by scale economies and/or sizable learning or experience curve effects, and few firms in the industry hold key patents and/or possess significant proprietary technology not readily available to a newcomer.

Threat of entry are greater in all of the following situations, EXCEPT whenQuestion 5AnswerA.incumbent firms are willing to strongly contest the entry of newcomers with moves designed to make entry unprofitable.B.a large pool of potential entrants exists, some of which have the capabilities to overcome high entry barriers.C.entry barriers are relatively low and buyer demand for the product is growing rapidly, and newcomers can expect to earn attractive profits without inviting a strong reaction from incumbents.D.existing industry members are looking to expand their market reach by entering product segments or geographic areas where they currently do not have a presence.E.customers have low brand preferences and low degrees of loyalty to seller

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

Potential entrants are more likely to be deterred from actually entering an industry whenMultiple Choicethe relative cost positions of incumbent firms are about the same, such that no one incumbent has a meaningful cost advantage.buyers are not particularly price-sensitive and the industry already contains a dozen or more rivals.incumbent firms are complacent.buyer switching costs are moderately low because of strong product differentiation among incumbent firms.incumbent firms are willing and able to be aggressive in defending their market positions against entry.