Five Force Model Discussion

The five force model is a framework tool used to assist in the analysis of completion within a bounded industry. This model is in essence, a model of an Industries’ structure. The five forces comprising this model and identified by Michael Porter to have an effect on industry structure are: rivalry, otherwise known as the intensity of competition; the threat of new entry (of competitors into an industry); supplier power or degree by which suppliers in an industry can dictate favorable contract terms and extract profit; buyer power or degree by which the companies within the buyers’ industry can control purchase agreement terms to their favor; and finally, the threat of substitutes or degree by which other products can be substituted for others to fill a demand. Analysis has shown that within an industry, such as the Commercial Airline Industry, in general, when the above defined five forces are strong, profitability of the industry tends to be diminished.
Since the establishment of the five force model, a sixth factor, known as “Impact of Complementors” has been recognized to affect industry profitability. A Complementor is an industry competitor who provides complementary, rather than competitive, services or products to another competitor within the same industry. There are industry specific factors that will determine the importance of Complementors within that industry.
By applying this five force model to an analysis of the U.S. Commercial Airline Industry, I will demonstrate how this tool is used in practice. Drawing upon the article “A Five-Force-Plus Complementors-Analysis of the U.S. Airline Industry” taken from the course text. As the article states, the Department of Transportation categorizes the airline industry into four major groups or types: Cargo, Regional, National and International. The article focused on analysis of the national airlines with sales of at least $1 billion annually. National airlines will also be the focus of the