Threat of Potential Entrants - Essay Example

Name Lecturer Paper Date Threat of potential entrants The Air express industry is faced up with a threat of potential entrants in the market. One year after the air express industry relaxed its regulation over controlling competition in the air cargo industry, its services was deregulated (Charles 23). The availability of choice among the workers in choosing either one of the cab to operate at a specific time of the day was one of the major influence that attributed to the entrance of other market participants. The cab control in the air cargo industry made an impact on the pricing of services since they significantly dropped. The immediate effects of the cab controls in the air cargo industry over to the potential ability of entrants in the market is that there were increased rates in the shipment of which made sure that all these activities could be carried out under low regulation (Charles 23). Freed from the constraints of regulation in the air cargo industry increased the potential ability threat of new entrants into the market. Basing on a scale of zero to ten on the threat of potential entrants towards building strategy, the scale will be 7. The regulations controlling potential entrants in the market are not much regulated hence new market entrants can join the air cargo industry to offer their services. Threat of substitute products There is also a threat of substitute products too in the air cargo industry. These substitute products are products that consumers can switch to either one since they are both potential in satisfying the similar wants (Charles 50). The air cargo due to negligence and diminishing of regulations has enabled the growth of the substitute goods to be offered in the industry. Services being offered by other entrants in the airport grounds are cheaper than that of the air cargo industry products. Since they poses substitute characteristic, customers will be willing to have it compared to the other high priced products being sold by the air cargo industry and yet they satisfy the same want (Charles 52). The entrant of substitute goods in the air express limited has negative effects since it will limit the industry’s profitability. On a scale base of 0 to 10, the best scale to rate the threat of substitute goods in the industry is 5. It will be half engaged for customers to shift to the other alternate product after winning their trust. The air express industry will therefore have a problem for the potential threat of substitute goods (Charles 53). Bargaining power of suppliers This is a competitive advantage for market entrants in the air express industry where inputs products can be introduced into the industry such as labor, materials and services (Greene 29). The bargaining power of the suppliers in the air express industry refers to the ability of major suppliers to be able to offer and raise input prices in the industry or in other ways to raise the cost. In order for suppliers to bargain effectively, they raise the cost of the products hence powerful suppliers are a threat to the industry. On the other hand when suppliers are weak, industrials companies will be forced to force down all the input prices and there will be demand in higher quality products or inputs in the industry. In the air express industry, powerful bargaining suppliers will be available when there are few substitute goods and also insignificant switching costs (Greene 28). The bargaining powers of suppliers in the air express industry can be rated on a scale of 8 out of 10. This is due to the strict levels of prices that are not fluctuating. The bargaining power of suppliers has had a competitive advantage in developing a better strategy. Bargaining power of buyers This is also a competitive advantage force in the industry amongst buyers. In the air express industry’s buyers maybe the individual consumers who are willing in paying attention to consume some of the products and services being offered in the industry (Greene 34). They are also known as the end users in the industry. In the air express industry, bargaining power refers to the ability available for buyers to bargain down their prices on certain services and products that are being charged high by the industries or in another way to raise the cost of the air express industry through demanding better products and services (Greene 35).. Raising costs and lowering of the prices in the industry will results to higher profit squeeze due to the powerful nature of the bargaining buyers. Buyers in the industry will be powerful when they have a choice of whom they are to buy from, when buyers purchase in large quantities and when switching costs are low (Greene 36). The bargaining power of buyers on a scale of 0 to 10 will be 2 since the prices in the industries are not fluctuating thus reflecting the less powerfulness of buyers in bargaining. Rivalry among existing firms Rivalry is one of the competitive forces that are available in an industry that offers service and products to customers as a strategy to meets its goals and objective. Rivalry amongst the existing firms in the air express industry refers to the competitive struggle that is engaged between two or more industries to gain the market share available from each other (Greene 36). The competitive struggle that exist amongst the firms’ incepted rivalry is being fought through prices, advertising, promotional spending, direct selling efforts, product design and support and after sale services. Intense rivalry in the industry may also imply to raises in costs and low prices which will squeeze the air express industry profitability (Greene 34). Rivalry in the industry will ensure the terms of the business are being followed clearly and they will not be an error in providing unworthy services and less quality products. In rating the rivalry among the existing firms in the air express industry is a moderately in rate. It occupies a 5th rate out of the 10 since the firms are competing effectively. Firms have adopted strategic roles in ensuring the air express industry competes appropriately with its rivals in offering services and products to esteemed customers (Greene 34). Work cited Charles. W. Hill. K.L., The air express industry: 40 years of expansion, The University of Washington, 2013. Print. Greene. W.J. Airfreight and surface transport: parcel industry primer, aviation journal, (May 11th 2013, print. Read More