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CIMAPRA19-E02-1 Exam - Topic 5 Question 71 Discussion

A low cost airline is operating three flights a day between two industrial cities in neighbouring countries. The cities are 300 km apart and the terrain between the two countries is mostly flat grasslands. The two cities are also linked by motorways and a railway line.At first the airline enjoyed first mover advantage and generated healthy profits for three years. But more recently, the airline is experiencing intense competitive pressures, reduced passenger numbers and lower returns. The airline directors are using Porter's Five Forces framework to analyse the nature and severity of the various competitive forces being experienced.In the context of this model which of the following forces would be considered as a threat of a substitute product or service?
A) High speed rail connection between the two cities
B) National airlines competing in low cost markets
C) Foreign airline now offering a service on this route
D) Corporate customers driving down ticket prices

CIMAPRA19-E02-1 Exam - Topic 5 Question 71 Discussion

Actual exam question for CIMA's CIMAPRA19-E02-1 exam
Question #: 71
Topic #: 5
[All CIMAPRA19-E02-1 Questions]

A low cost airline is operating three flights a day between two industrial cities in neighbouring countries. The cities are 300 km apart and the terrain between the two countries is mostly flat grasslands. The two cities are also linked by motorways and a railway line.

At first the airline enjoyed first mover advantage and generated healthy profits for three years. But more recently, the airline is experiencing intense competitive pressures, reduced passenger numbers and lower returns. The airline directors are using Porter's Five Forces framework to analyse the nature and severity of the various competitive forces being experienced.

In the context of this model which of the following forces would be considered as a threat of a substitute product or service?

Show Suggested Answer Hide Answer
Suggested Answer: A

by Corinne at Jul 09, 2023, 05:56 PM

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Vivienne
10 months ago
I agree, the rail option is way more convenient!
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Ernestine
10 months ago
Corporate customers pushing prices down is a big issue too.
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Madelyn
10 months ago
Surprised that the rail isn't the main threat here!
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Julianna
10 months ago
I think national airlines are more of a direct competition.
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Rosendo
10 months ago
High speed rail is definitely a substitute!
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Dan
11 months ago
I thought substitutes were more about different types of services, but I guess corporate customers pushing prices down could also impact demand, right?
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Francoise
11 months ago
I practiced a question like this before, and I believe the high-speed rail option is the most direct substitute since it's an alternative mode of transport.
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Holley
11 months ago
I'm not entirely sure, but I remember that substitutes are usually other products that can fulfill the same need. So, maybe the national airlines could also be considered a threat?
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Mari
11 months ago
I think the high-speed rail connection could definitely be seen as a substitute since it offers a similar service for the same route.
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Denise
11 months ago
I'm a bit confused on this one. Is it possible that a self-signed certificate for the Vault could work? Or maybe a certificate for the PVWA server? I'll have to review the material again to be sure.
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Alona
11 months ago
Okay, I think I've got it. The key here is that the cleaners didn't read the contract, which contained the important information about the approved products. So it's not really a communication issue, it's more about the cleaners not following the instructions. I'll go with B - miscommunication.
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Graciela
11 months ago
Hmm, I'm not too sure about this one. I know there are a few different options for managing shared storage, but I'm not familiar with all the details. I'll have to think this through carefully.
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Aretha
1 year ago
Definitely option A. The national airlines and foreign carrier are competitors, not substitutes. And corporate customers driving down prices is more of a bargaining power issue.
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Leonor
1 year ago
Yes, the foreign airline offering a service on this route would be more of a direct competitor rather than a substitute.
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Remona
1 year ago
C) Foreign airline now offering a service on this route
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Beckie
1 year ago
I agree, the high speed rail connection would definitely be considered a threat of a substitute product or service.
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Veronika
1 year ago
A) High speed rail connection between the two cities
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Antonette
1 year ago
Haha, I bet the airline executives are wishing they had invested in the railway line instead! That would have been a clever move to control the substitute.
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Arlyne
1 year ago
D) Corporate customers driving down ticket prices
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Herman
1 year ago
C) Foreign airline now offering a service on this route
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Tiffiny
1 year ago
B) National airlines competing in low cost markets
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Genevieve
1 year ago
A) High speed rail connection between the two cities
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Tamera
1 year ago
D: Corporate customers driving down ticket prices must be impacting their profits as well.
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Milly
1 year ago
C: The foreign airline offering a service on this route is definitely increasing the competitive pressure.
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Lou
1 year ago
B: I agree, it would have helped them control the threat of substitute products or services.
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Nobuko
1 year ago
A: Definitely! Investing in the high speed rail connection would have been a smart move.
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Jesusita
1 year ago
But what about option C, the foreign airline offering a service? That could also be a threat, right?
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Tequila
1 year ago
I agree with Aliza, the high speed rail connection could definitely lure passengers away from the airline.
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Alpha
1 year ago
I agree, the high-speed rail is definitely the biggest threat here. It offers a direct and potentially faster alternative for travelers between the two cities.
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Eun
1 year ago
User 2
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Alpha
1 year ago
User 1
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Aliza
1 year ago
I think option A, high speed rail connection, would be a threat of a substitute product.
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Dorothy
1 year ago
But what about option B) National airlines competing in low cost markets? Wouldn't that also be a threat?
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Lasandra
1 year ago
The high-speed rail connection seems like a clear substitute service that could pose a threat to the low-cost airline. Passengers may choose the convenience and speed of the train over the airline.
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Vesta
1 year ago
D) Corporate customers driving down ticket prices
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Kent
1 year ago
C) Foreign airline now offering a service on this route
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Rachael
1 year ago
B) National airlines competing in low cost markets
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Kenneth
1 year ago
A) High speed rail connection between the two cities
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Velda
1 year ago
I agree with you, Gilbert. A high speed rail connection could definitely attract passengers away from the airline.
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Gilbert
1 year ago
I think option A) High speed rail connection between the two cities could be a threat.
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