Environmental Forces Affecting British Airways

Pestle Factors Key points Heavy regulation (AEA, 2009). Implications for British Airways Allegations for British airways compliance are essential in a case British airways wants to remain

Cowper-Smith & de Grosbois (2011, p.59) stated that airlines are not currently focusing enough on their social responsibilities, an area in which Qantas should look to be at the head of their industry. The way in which Qantas operates can have monumental impacts not only on their customers but to the environment itself. Planes although a current need in society also come with a heavy amount of baggage which influences the environment. Aircraft noise, impact on local air quality are just some of the by-products of aircraft travel (Goodman, 2009 p.14). The most discussed and criticised issue within aircraft travel in the modern climate however, is the affect that it has on the environment. This is due to amount of emissions in which are consumed through aircraft travel. Shell aviation the “leading global supplier of world-class aviation fuel and lubricants” supplies almost 7000 aircrafts with fuel each day, refuelling a plane every 12 seconds. Qantas airlines should be knowledgeable on how much fuel they are using and the type of fuel they are using. Pollution resulting from greenhouse gasses and emissions can result in horrific consequences for the environment. Examples of costs that Qantas may endure from its impact on the environment could be adding to the growing concern of global warming throughout the world (Kolstad, 1996 p.1). This is leading to issues such as sea level rising, melting of snow and ice and changes to plant growth and nutrition

Suppliers generally have a moderate to high bargaining power within the industry due to the limited number of suppliers which forces aviation companies to choose from the number available and accordingly to accept their prices. In fact, fuel is the second highest cost for aviation companies. There are highly depended on supplier’s prices and the availability which indicates on a relatively high bargaining power of suppliers. In addition, there are high switching costs which are strongly in favor of the suppliers and means that the company experiences an increase in operating costs when switching to another supplier as flying another type of aircraft leads to additional costs (maintenance, training etc.).Aircrafts are vulnerable to delays due to the location of gate locations which leads to a decrease in utilization and therefore to an increase in costs.

Michael Porters Five Forces analyse the internal and external factors that determine the competitiveness of an industry. The five areas that are examined by Porter

2. How Porter's Five Forces of Competition impact the company Porter set out his famous Five Forces model in chapter 1 of his 1980 Competitive Strategy: Techniques for Analyzing Industries and Competitors, which has now become the dominant paradigm for the "Structural Analysis of Industries." The model places supply chain forces on the horizontal access and market structure vertically above and below industry competition, which they all point to as the center of potential profitability (Hitt, Ireland and Hoskisson,

Now moving straight to what exactly is the five forces analysis of Porter. Examining the intensity of rivalry within an industry and business strategy improvement is what this analysis is framed for. Drawing upon industrial organisation economics to resolve the driven concentration and thus attractiveness, meaning

Porter’s Five Competitive Forces Analysis is a framework developed by Michael E. Porter of Harvard Business School for study of industry analysis by analyzing five competitive forces which define industry and its business strategy. These five competitive forces determine the competitive advantages, disadvantages and attractiveness or profitability of industry.

These external competitive forces can restrict and shape pricing policy on some of EasyJet’s less profitable routes as they seek to compete with their competitors.

When you look at the five forces none of them seem very friendly. Both the buyers and the suppliers have power in the industry, which means bad news for the industry. Buyers not only have power, but also have many substitute options that they can use compared to only flying. The other substitute options that they have are taking a train, boat, or bus. Another issues that there is in the airline industry is that it is very difficult to enter. High entry costs can deter companies from entering the industry. If you’re able to establish your company in the airline industry it’s hard to differentiate yourself. The only real way that you can differentiate yourself is with the different routes that your company can take. However, no matter what different routes that your company can offer, there is always a substitute available for the buyer.

550 destinations. The British Airways group consists of British Airways Plc and a number of subsidiary companies including, among others, International Aeradio, British Airways Helicopters serving mainly the North Sea oil rigs and British Airways Holidays Limited

Supplier power is high given that there are limited plane and engine manufacturers to choose from. The airline industry is dominated by few major players including The Boeing Company, General Electric Company, United Technologies Corporation, Northrop Grumman Corporation, and Lockheed Martin Corporation. There are certainly few options in this category, and the industry is dominated by very powerful suppliers. For instance, The Boeing Company has a market share of

For example, Boeing and Airbus supply most commercial aircraft. The concentration within the suppliers segment of the industry makes it very difficult for competitors to exercise leverage over another supplier and obtain lower prices. The power of the supplier is one key in prohibiting the ability of competitors to earn higher profits.

The Bargaining power of buyers – The aviation industry depends on airlines and governments for almost the all of its total

* Most aircraft manufacturers lack diversification – they depend primarily on civil aviation for their revenues, with defense, space, helicopter etc contributing to a smaller extent. For instance, in 2009, 50% of Boeings revenues came from commercial airlines. Hence these suppliers are also dependent on the airlines for their sustenance, thereby limiting their power.

Porter’s 5 Forces analysis is a commonly used business theory that identifies the 5 competitive forces of an industry. By identifying and analysing these forces you can determine an industries weaknesses and strengths. Porter recognised the 5 forces in most business markets to be internal rivalry, entry, substitutes and compliments, supplier power and buyer power.