ACCA Applied Knowledge · Business and Technology · Competitive factors
A regional airline finds that on one route many passengers now choose high-speed rail instead, because it is similarly priced and convenient. In Porter's Five Forces model, this is best described as:
This is a threat from substitutes. High-speed rail meets the same travel need through a different type of product outside the airline industry, so it can draw customers away. Rivalry would concern other airlines competing directly on the same route.
- ARivalry among existing competitors
- BA threat from substitute productsCorrect
- CA threat from new entrants
- DIncreased supplier power
Explanation
Rail meets the same customer need by a different means from outside the airline industry, so it is a substitute. Rivalry refers to competitors offering the same type of product, here other airlines.
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