Porters Five Forces Model & the Airline Industry

This document will be using Porter’s Five Forces Model and a Political, Economic, Social, and Technological (PEST) analysis to conduct an external analysis on Southwest Airlines.

This report will be discussing strategic management to a company in the airline industry. This report will examine a chosen company’s strategic management and outline the stages. Strategic management is analyzing the situation facing the firm, also on the foundation of analysis formulating a strategy and lastly implementing strategy. Strategic management is the identification and the description of strategies that can be used by managers so as to attain better

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.

The task instruction is: Analyze Company G’s competitive environment utilizing Porter’s Five Forces Model of competitive forces. While headings below may provide some guidance for how to organize the paper, please refer to the recommended text (index topic: “Porter’s 5 forces model”), the learning community, and recommended web sites. As you will see from the reading, Porter’s 5-forces is a way to examine threats to a company’s success – which was competition imposes.

This is an analysis of the Airline Industry in Europe. The paper will cover the current market situation, including financials and market volume. Following this will be a Five Forces analysis on the factors that affect industry competition. The paper will conclude with key insights into the profitability of the industry and a SWOT analysis of one of the industry’s best performers and what rivals and possible future entrants can learn from their success.

The following paper provides an analysis and evaluation of the current market position of Qantas and the airline industry. By assessing the company both internally and externally by applying PESTLE and Porter’s Five Force frameworks, this report will assess Qantas’ opportunities and strengths within the aviation industry. In addition to this, the report will focus on the specific resources and capabilities that enable Qantas to obtain a competitive advantage over its competitors through the use of the VRIO framework. A final analysis

A. Describe the environment, as viewed by Michael Porter’s model of competitive forces, that Valuejet was trying to compete in. consider competition, suppliers, customers, new entrants, substitute products? The five competitive forces that shape strategy are competition, suppliers, customers, new entrants, substitute products. Michael E. Porter demonstrates how the five competitive forces can be used in any industry. The results from all five forces not only look at the narrow aspect of competition rivals but as well as broader aspect of competitive interaction within an industry. These five competitive forces can also be used in the case of Valuejet. Competition within the airline industry is highly

Bargaining power of supplier: High levels of competition among suppliers act to reduce prices to producers. This is a positive for Ford Motor Company. Standardization of parts allowed Ford to reduce dependency on fixed supplier/vendor which goes into producer’s favor.

Power rests with the suppliers in the form of price and quality of supplies. Suppliers can increase the price or lower the quality of their goods and services. The power of supplier in the Indian airline industry is immense because of the three major inputs from the supplier are all affected by the external environment. These 3 factors and the power of supplier for each component is explained below.

There are only 3 main competitors in the commercial jet engine-making industry which operates as an oligopoly. Historically, all of these companies have competed with each other for jet engine contracts which led to intense price wars. To avert ruinous price wars, these companies typically enter into exclusive supplier contracts with aircraft manufacturers. In such arrangements, the engine maker becomes the sole provider of jet engines for a specific aircraft model.

Understanding the adversarial nature of the airline industry is very important in helping us understand and evaluate British Airways' current position in the industry and how Porter's Five Forces Model can assist the company in increasing its profitability by making better strategic decisions.

Powerful customer-the flip side of powerful suppliers-can capture more value by forcing down prices, demanding better quality or more service, and generally playing industry participants off against one another at the expense of industry profitability. Buyers are powerful if they have negotiating leverage relative to industry participants, especially if they are price sensitive, using their clout primarily to pressure price reduction. The bargaining power of the buyers is very high as now a day’s tickets can be booked online and if they can go for the cheapest fares and there is not much cost involved in it.

The Airline Industry is in an interesting situation. Simply adding a low cost alternative is not enough in the industry. The Internet has made the power of buyers grow with the transparency of ticket prices. This is not something that will change any time soon. Because of this profitability is predominately reserved for low-cost yet distinctive carriers. No consumer wants to ride what they consider a “lesser” airline. Airlines need a way to distinguish themselves from one another while also acknowledging the increased power of buyers.

Porter's Five Forces can be applied to particular companies, market segments and industries with the step-by-step analysis of market structure and competitive situation. First of all, when implementing this module in organizations, it is necessary to determine the scope of the market to be analyzed. Following, all relevant forces for this market analyzed and key forces are identified (Gerry and Kevan, P.117). Actually some organizational strategy and the longer-term goals are mainly based on or consistent with the key forces. Hence, it is not necessary to analyze all elements of all competitive forces with the same depth. Moreover, the key forces in the competitive environment will vary in different industry. Different forces take on prominence in shaping competition in each industry (Porter,

This document is an essay on the Duopoly Market Structure existing in the Aircraft Manufacturing Sector. This is meant purely for information purposes.