Bargaining Power of Suppliers - There is a medium level of supplier bargaining power. The supply chain is vast, including (among …show more content…
Written in bold on the first page of United’s 2016 annual report “The airline industry is highly competitive and susceptible to price discounting and changes in capacity, which could have a material adv erse effect on the Company.”(1). Additionally, it is stated that significant price increases often and will likely result in a drastic decline in sales due to price pressures from domestic and international competitors. Internal rivalry has been increasing and is likely to increase, particularly in the international front with the mergers, acquisitions and joint ventures being carried out. Both domestic and international competition for United are further increased by high exit barriers and fixed costs.
Based on an analysis using Porter 's 5 forces, we suggest the airline industry is in a mature phase marked by high levels of price competition and consumption. We do not think it is actively being pursued as a prospect by outsiders but there are threats of M&A activity in international markets which could create price risk. Periodic changes in capacity that lead to downsizing can create conflcit with labor unions. Ultimately, it comes down to a highly visible price war isn’t that prospective entrants are none the eager to partake