ACCA Applied Knowledge · Business and Technology · Technological factors
A small bank finds that new online-only competitors can offer accounts with very low set-up costs and no branches. Using Porter's five forces, which force has technology most directly strengthened?
The threat of new entrants. Technology has removed barriers such as costly branch networks and high capital requirements, allowing online-only competitors to enter the banking market cheaply and compete with established banks.
- AThreat of new entrantsCorrect
- BBargaining power of suppliers
- CRivalry among existing firms only
Explanation
Technology has lowered barriers to entry such as the need for a branch network and capital, so new entrants are a bigger threat. The scenario does not concern suppliers, and rivalry is a consequence rather than the force directly affected.
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