Please answer the question below by using the attachment file.
make it easy as you can by using simple words.
1- To what extent can the industry’s low average profitability be attributed to the structure of the industry – which of Porter’s five forces has biggest impact in depressing industry profitability?
2- Are there any strategies by the airlines that have been effective in moderating the forces of competition?
3- Are there any other strategies that the airlines could use to improve industry profitability in the future, and what is the outlook for industry profitability during the five-years period 2013-17?
4- Would you buy airlines stocks for your retirement portfolio, and why?
preview of the answer..
How structure affects profitability in the airline industry
The year 2011 was a very dismal year in terms of performance for American airlines. This is because of the fact that the profit margin in the industry was just 1% with a net profit of $0.4billion. Several aspects are blamed for the industry’s poor performance such the high cost of oil in the global market and the 2008 global financial recession. However, the structure of the industry can also be blamed for the poor performance. One of the structures affecting the airline industry is the pricing strategy structure. Pricing strategy in this industry is very critical in matters related to profitability. Prices responses to new airlines entering the industry which charge low prices can have serious implications to the short-term financial viability and …
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