Question

Airbnb, a room-sharing site, offers more rooms than Marriott. Goldman Sachs suggests that the supply of new rooms over the next two years will outpace the previous five even though the growth of American occupancy rates has begun to slow. Which competitive force is involved in this situation?

a) the threat of favourable government policies
b) the threat of new buyers
c) the threat of new entrants
d) the threat of proprietary products

Answer 1

C) The threat of new entrants.

Step-by-step explanation:

Porter's Five Forces: It's an analysis helpful for the industries to get the understanding of the loopholes and their weaknesses. Porter suggested that anytime a company goes down, there would be one force involved among the following five forces.

1. Threat of new entrants.
2. Bargaining power of buyers.
3. Threat of substitutes.
4. Rivalry among existing competitors.
5. Bargaining power of suppliers.

In our case:

• Threat of new entrants force is involved: There is always a threat to the existing companies of the new company entering the market. Some companies doesn't take them seriously and ends up getting damaged. And, as the Goldman suggests that new supplies of the rooms in coming years will hurt the existing companies. So they must act on this information and make a decision to change the event for their own better.