Swot Analysis : The Airline Industry

1377 Words Sep 30th, 2016 6 Pages
Vincent Oram
Strategic Management
Five Forces
9/30/16

When considering to enter a market or not, one of the smartest things a company can do is run a five forces analysis. This analysis looks over the level of competition in an industry to find the intensity of it, which in turns shows the attractiveness of entering this industry or not. This analysis looks over five categories; the threat of new entrants, the threat or availability of substitutes, the power of buyers, the power of substitutes, and finally the competitive rivalry. To apply this analysis to a real world example, the airline industry will be discussed because most people see it as an oversaturated market that is too hard to enter. The first category of the analysis that will be discussed is the threat of new entrants. To talk about this category one has to look at the entry barriers which to name a few are; government restrictions, economies of scale, capital requirements, access to distribution channels and product differentiation. In the airline industry it is obvious that a person who is looking to enter this market needs a lot of capital to start. Whether that is if that person is lucky enough to have millions of dollars lying around or if they can get a huge loan, it is a huge investment just to get one plane not even adding in the cost of fuel, maintenance and the employees’ salaries. If you manage to get the capital saved up you then have to figure a way to make your product different from everyone…

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