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Assess, with reference to Porter’s five forces, whether the ‘bargaining power of buyers’ represents the most significant external influence on easyJet plc. - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Question 1
Assess, with reference to Porter’s five forces, whether the ‘bargaining power of buyers’ represents the most significant external influence on easyJet plc.
Worked Solution & Example Answer:Assess, with reference to Porter’s five forces, whether the ‘bargaining power of buyers’ represents the most significant external influence on easyJet plc. - Edexcel - A-Level Business - Question 1 - 2022 - Paper 2
Step 1
Knowledge of Porter’s five forces: rivalry among existing competitors
Answer
The airline industry is characterized by high competition, with several budget airlines such as Ryanair and easyJet vying for the same customer base. This rivalry can pressure airlines to lower prices to attract consumers.
Step 2
Significance of bargaining power of buyers
Answer
Consumers have multiple choices among budget airlines, which allows them to exert pressure on airlines like easyJet to lower fares. They also have alternative transportation methods, such as trains and buses, which further diminishes the impact easyJet can have on pricing.
Step 3
Step 4
Possible counterbalance: power of suppliers
Answer
Suppliers play a crucial role, accounting for roughly one-third of total costs. This limits the potential profit margins of budget airlines, suggesting that while buyers exert influence, suppliers also substantially affect operational costs.
Step 5
Conclusion: assessing the overall significance
Answer
Considering the dynamic nature of the airline market and the evolving expectations of consumers, the bargaining power of buyers indeed emerges as a significant external influence on easyJet plc. However, the interdependence with supplier power and competitiveness indicates that multiple forces play vital roles in shaping easyJet's operational landscape.