Question

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

Answer 1

Answer:

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

Explanation:

According to American Harvard Business professor Michael E. Porter (born in 1947), there are five (5) forces driving business: 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. Usually, when there are more suppliers than buyers or when the suppliers are willing to join forces, they gain more power.

Thus, as Boeing and Airbus compete for the aircraft market, they have few supplier power which could be attractive for investors interested in engaging the domestic flights market.