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 favorable government policies
B) the threat of new buyers
C) the threat of new entrants
D) the threat of proprietary products

Question

Quizplus · Accepted Answer

The threat of new entrants refers to the possibility that the profits of established firms in the industry may be eroded by new competitors. The extent of the threat depends on existing barriers to entry and the combined reactions from existing competitors. If entry barriers are high and/or the newcomer can anticipate a sharp retaliation from established competitors, the threat of entry is low. These circumstances discourage new competitors.

Airbnb,a Room-Sharing Site,offers More Rooms Than Marriott