The ultimate goal of any industry is to increase its revenue. Such is the case for the airline craft manufacturing industry as well. To the underlying structure of this aircraft manufacturing industry Five force analysis will help us indicate if firms will face strong or weak competitive forces. Let us use the five force framework to help identify the key structural features of industries that determine the strength of the competitive forces and hence industry profitability.
There are only two main players in the Aircraft manufacturers which makes the market a Monopoly. Since there is only minimal product differentiation, buyers dictate the price and the two main players involve in a price war, there by gaining surplus.
High - The two main rivals in the Aircraft manufacturing industry are Airbus and Boeing that are competing intensely in the large passenger jet aircraft market. Since the capital investments are high, Boeing and Airbus have severe competition between them to gain the market share. The aircraft size is almost the same, with the same kind of cruising ranges. To the consumer, this could be nothing. With the belief that airbus is going to sleeper cabins, cocktail lounges, gym airbus could have the much differentiated product from its competitors Boeing. Since industry growth is slow, both companies fight for market share.
Low -Since the aircraft industry does not have many players, and the operating firms earn high profits. While we may expect firms to join the market and increase industry rivalry, this might not happen because of the high investments involved to in entering the market. Since the fixed cost is high, there are several factors that deter new entrants. Most companies require huge investments for complex assembly lines, training resources, experience and testing. Since a great deal of training and...