PORTER 5 FORCES. CASE STUDY AIRLINE
Markets, Marketing and Strategy
Seminar 3 Week 5.
Your task for next Monday's in-class tutorial is to locate two substantive sources of information relating to the Porter's 5 forces framework that affect the Airline industry.
M.Porter’s framework
Source http://www.investopedia.com/features/industryhandbook/airline.asp
A -Threat of New Entrants is low
(=The existence of barriers to entry (patents, rights, etc.)
The airline industry is so saturated that there is hardly space for a newcomer even to squeeze its way in. The main concern for this is the cost of entry. The airline industry is one of the most expensive industries, due to the cost of buying and leasing aircrafts, safety and security measures, customer service and manpower. Another major barrier to entry is the brand name of existing airlines and it is really difficult to lure customers out of their existing brands.
B - Availability of Substitutes.
(=The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives.)
What is the likelihood that someone will drive or take a train to his or her destination? For regional airlines, the threat might be a little higher than international carriers. When determining this you should consider time, money, personal preference and convenience in the air travel industry.
C -Bargaining power of buyers
Low : a certain location certain time --> only one ticket --> low buyer power.
Ex) for very specalised airlines (ski planes) gives the airline the advantage. Destination.
High: now easy to compair what tickets are the cheapest w/ website ex) edreams.
D -Bargaining power of suppliers
Two main manufacturers : boieng and airbus --> quite big power on setting price.
Switching cost is high because mostly long time contracts.
Airport (supplier also) because they set the fees. -> demand is there -> they know they can put the prices high.
Fuel , food in the
Seminar 3 Week 5.
Your task for next Monday's in-class tutorial is to locate two substantive sources of information relating to the Porter's 5 forces framework that affect the Airline industry.
M.Porter’s framework
Source http://www.investopedia.com/features/industryhandbook/airline.asp
A -Threat of New Entrants is low
(=The existence of barriers to entry (patents, rights, etc.)
The airline industry is so saturated that there is hardly space for a newcomer even to squeeze its way in. The main concern for this is the cost of entry. The airline industry is one of the most expensive industries, due to the cost of buying and leasing aircrafts, safety and security measures, customer service and manpower. Another major barrier to entry is the brand name of existing airlines and it is really difficult to lure customers out of their existing brands.
B - Availability of Substitutes.
(=The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives.)
What is the likelihood that someone will drive or take a train to his or her destination? For regional airlines, the threat might be a little higher than international carriers. When determining this you should consider time, money, personal preference and convenience in the air travel industry.
C -Bargaining power of buyers
Low : a certain location certain time --> only one ticket --> low buyer power.
Ex) for very specalised airlines (ski planes) gives the airline the advantage. Destination.
High: now easy to compair what tickets are the cheapest w/ website ex) edreams.
D -Bargaining power of suppliers
Two main manufacturers : boieng and airbus --> quite big power on setting price.
Switching cost is high because mostly long time contracts.
Airport (supplier also) because they set the fees. -> demand is there -> they know they can put the prices high.
Fuel , food in the