Question

In the airline industry, consolidation among fuel providers serving airport facilities would be considered as ____ factor in the five forces model of competition.a. a reduction of the airlines' abilities to enjoy economies of scaleb. an increase in switching costs because the airlines have no choice but to use jet fuel and other oil productsc. an increase in the bargaining power of suppliers of a critical inputd. an increase in the intensity of rivalry among airlines for scarce resources

Answer 1

Answer:

In the airline industry, consolidation among fuel providers serving airport facilities would be considered as ____ factor in the five forces model of competition.

c. an increase in the bargaining power of suppliers of a critical input

Explanation:

When the fuel providers consolidate their businesses, they increase their bargaining power.  The airlines' bargaining power has been reduced with the consolidation.  While it is easier to negotiate with a single service or product provider, the divide and rule approach which the airlines can employed has been eroded with the consolidation.  The fuel supplier, as one organization, is able to determine prices and available of this critical resource for the airlines.