We could look at the same thing to finish up this part,
when we talk about customers.
Who has the bargaining power?
Is it the industry we're looking at and the companies inside that industry,
or is it the consumers that are buying the product or service?
And from a company's perspective, inside the industry, they'd like
to be able to dictate to consumers what the price and the quality is going to be.
They don't want consumers to be able to tell them what price and
quality ought to be.
Now when you have a lot of competition,
you would expect consumers to have more bargaining power.
In the airline industry, continuing with that example,
historically we've seen that consumers have a lot of bargaining power.
And you might not see that intuitively at first glance, but
if you think about flying, it's not very often that we have to fly.
Perhaps if there's a death in the family we feel compelled to fly
to a funeral service, sadly, but in today's world we can
communicate via video camera over lots of different services.
We can send packages and letters electronically or through cargo services.
We can rent cars and drive, we can take trains, we can take ships, we can not go.
And there, historically in a lot of places including the United States,
have been a large number of providers, and
so consumers have been able to choose which airline to fly.
Now that's not always the case, depending on the community you live in.
But that's another force in this model that shows the airline
industry to be a very unprofitable one.
And so, if you're in the industry, the bottom line is you would love to have
the bargaining power over both your suppliers and your customers.
And so that finishes this part, where we focused on these two forces.
In the next part we'll finish this model or framework and
look at three of the other forces in Porter's framework.