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

Actual exam question for CIMA's CIMAPRA19-E02-1 exam

Question #: 71
Topic #: 5

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?

AHigh speed rail connection between the two cities

BNational airlines competing in low cost markets

CForeign airline now offering a service on this route

DCorporate customers driving down ticket prices

Show Suggested Answer

Suggested Answer: A

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

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Vivienne

6 months ago

I agree, the rail option is way more convenient!

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Ernestine

6 months ago

Corporate customers pushing prices down is a big issue too.

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Madelyn

7 months ago

Surprised that the rail isn't the main threat here!

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Julianna

7 months ago

I think national airlines are more of a direct competition.

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Rosendo

7 months ago

High speed rail is definitely a substitute!

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Dan

7 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

8 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

8 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

8 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

8 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

8 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

8 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

12 months 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

11 months ago

D) Corporate customers driving down ticket prices

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Herman

11 months ago

C) Foreign airline now offering a service on this route

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Tiffiny

11 months ago

B) National airlines competing in low cost markets

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Genevieve

11 months ago

A) High speed rail connection between the two cities

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Tamera

12 months 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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