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?

Answer 1

Answer:

threat of new entrants.

Explanation:

Based on the scenario being described within the question it can be said that the competitive force involved in this situation is the threat of new entrants. This refers to the risk that existing companies in a market face of new competitors entering the market and overtaking their market share, eventually forcing them out of the market. Which tends to happen more when a market is expected to grow drastically in the near future as new companies want to take advantage of the opportunity such as is expected to happen in this scenario.

Answer 2

Answer:

B) the threat of new entrants

Explanation:

Porter's Five Forces framework is used to the competitive forces that shape an industry and exploit a company's weaknesses.

1. threat of new entrants: Marriot and other established hotel chains are facing the threat of more room sharing or vacation rental apps "breaking" the market, e.g. AirBnB, Vrbo, Booking, etc., are growing everyday at a much faster pace than hotels. An increase in competition plus a decrease in demand can really be a disruptive force in a market and some players will be forced out.
2. bargaining power of buyers.
3. threat of substitutes.
4. rivalry among existing competitors.
5. bargaining power of suppliers.