Which of the following is likely to happen due to horizontal mergers between competitors such as Delta and Northwest airlines?
A) The overall industry profitability will increase.
B) The threat of strong competitive forces such as supplier power will increase.
C) The industry will face excess capacity in the future.
D) The structure of the industry will change from consolidated to one that is fragmented.

Question

Quizplus · Accepted Answer

Having fewer competitors generally equates to higher industry profitability. According to Strategy Highlight 3.2, the U.S. domestic airline industry has witnessed several large, horizontal mergers between competitors, including Delta and Northwest, United and Continental, Southwest and AirTran, as well as American and U.S. Airways. These moves in turn allow the remaining carriers to enjoy a more benign industry structure.

Which of the Following Is Likely to Happen Due to Horizontal