Explain the five forces of Porters competitive analysis, apply each of the elements of Porters analysis to the uk airline industry?
The study is having in depth discussion about the Porter’s five forces analysis. The study is completed taking into consideration United Kingdom airlines. As mentioned by Dobbs (2014), airline industry is one of the fastest growing industries in UK. With the help of Porter five forces, complete analysis of UK airline is done.
In context to this Franek and Kresta (2013), Porter competitive analysis helps in analyzing the competitive analysis in industry. It also helps in analyzing the strategy adopted by organization to increase their performance. The competitive analysis helps in evaluating the strength and weakness of each product of industry. Along with this, it also helps in analyzing the position of organization is comparison of other competitors. The five forces considered in Porter competitive analysis are,
As commented by Magretta (2013), with the change of industry, suppliers also change. Some of major suppliers are supplier of labors, expertise services, raw materials and others. On the other hand, the prospective factors which affect the bargaining power of suppliers are, demand and requirement of product or service in market. In case of suppliers, they try to work in a team, as it helps in increasing their profitability. According to outlook and opinion of Marshall (2013), the bargaining power of suppliers increases with the decrease of supplier. That is, the market where there is less number of suppliers the bargaining level will be increased.
From the opinion of McLay (2014), in some industries buyers are also known as customer or consumers. With the help of bargaining power of buyers the level of output of industry is analyzed. For example, the product is available in huge amount in market and then bargaining power of buyer will also be high. In context to this Porter and Heppelmann (2014) commented, the factors which help in increasing the bargaining power of buyers are low prices of product or services and others. Along with this, with the availability of substitute of product or services, the bargaining power of consumer is increased. On the other hand, the bargaining power of buyer is increased with the decrease in product differentiation.
In context to this Riwo et al. (2013) stated, with the high level of profit share of market, the number of new entry is analyzed. That is, the market having high number of profit share will attract more number of new entries. On the other hand, sometimes the high number of new entry affects the profit share of the market. In current time, the market having large number of technology dependency is having high number of new entry. Apart from this, there are many factors in each market which affect the new entry. As stated by Ruiz (2013), some of the factors which affect the new entry are internal scale of economy, government policies and others. The new entry in market also increases the number of competitors.
As commented by Emboaba (2014), with the availability of substitutes the bargaining power of customers are decided. The threat regarding substitute affect the environment of organization as well as bargaining power. The level of substitute threat is dependent on the low cost of substitute product present in market. Some of the other factors which affect the threats of substitute are consumer change regarding the product and services. In perspective to this Casado et al. (2014) commented, the performance level of substitute product and service in market. The performance of substitute product or service is dependent on cost and availability of substitute.
As stated by Ruiz (2013), competitiveness is dependent on the availability of competitors in market. Some of the factor which affect the competitiveness in market are, effective competitive strategies and policies, level of transparency and other. The main factors which affect the performance of competitors in market are availability of competitors, their profit share and others. In perspective to this Franek and Kresta (2013) stated, the factors which affect the competitive entry in market are, market growth rate, fixed cost, storage cost, product differentiation and others.
According to opinion and outlook of Marshall (2013), competitive analysis helps in analyzing the threats regarding new product in UK airline. Apart from this, it also helps in analyzing the level of profitability and productivity of UK airline industry. The competitive analysis is completed with the help of five forces. The five forces for analyzing the competitive level of UK airline industry are,
The factors which act as a barrier or threat regarding competitiveness in airline industry are high level of fixed cost, steady growth rate and others. In case of UK airline companies, competitors help in increasing the performance of industry (Ruiz, 2013). It also helps in enhancing the profitability of individual organization.
From the outlook of McLay (2014), some of the substitutes of airline transport in UK are marine, roads, railways and others. With the low cost of substitute, the level performance of UK airline industry decreases. The other factors which affect the operation and performance of UK airline industry are effective competitive strategies, plans and others. The cost of substitute product and service affect the overall profitability of UK airline. In relation to this Marshall (2013) stated, with the change of customer financial stability the choice of transport is dependent. The low cost and high availability of substitute also affect the operation of UK airline.
As commented by Dobbs (2014), in case of UK airline industry some of the major factors which act as barrier or threat to new entry are,
Some of UK airline companies are British airways, Titan airways, Thomson airways and others. The high level of customer’s loyalty is one of the major factors which act as barrier in entry of new airline companies.
In context to this Marshall (2013) commented, the buyer power of bargaining in case of UK airline industry is dependent on availability of substitutes. The change number of availability of substitutes increases the bargaining power of buyer and consumers. Some of the factors which affect the buyer bargaining power are technology, level of loyalty and others. It was found in a research by Magretta (2013), the level of buyers bargaining is high in UK airline industry. The main reason is availability of number of airline companies and substitutes. The bargaining power of buyer is directly dependent on availability of products and services.
As commented by McLay (2014), bargaining power of supplier depends on factors like, switching cost, product differentiation and others. In case of UK airline industry, suppliers are mainly regarding the raw materials, parts, machines and others. Along with this, the availability of supplier in airline market is less in number. The low number of supplier increases the bargaining power of them. On the other hand, it affects the overall performance of UK airline industry. Apart from this, some of the factors which help in increasing the power of suppliers are the low availability of product substitutes, increase in price of product and others.
With the help of five factors discussed in this study, supplier power, competitive rivalry, threat of substitute, threat of new entry and buyer power, the competitive analysis of UK airline is completed. The stability and performance UK airline industry are also evaluated and analyzed.
Dobbs, E. M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.
Franek, J., and Kresta, A. (2013). Competitive strategy decision making based on the five forces analysis with AHP/ANP approach.
Magretta, J. (2013). Understanding Michael Porter: the essential guide to competition and strategy. Harvard Business Press.
Marshall, S. J. (2013). Evaluating the strategic and leadership challenges of MOOCs. MERLOT Journal of Online Learning and Teaching, 9(2), 216-227.
McLay, A. (2014). Re-reengineering the dream: agility as competitive adaptability. International Journal of Agile Systems and Management, 7(2), 101-115.
Porter, M. E., and Heppelmann, J. E. (2014). How smart, connected products are transforming competition. Harvard Business Review, 92(11), 11-64.
Riwo-Abudho, M., Njanja, L., and Ochieng, I. (2013). Impact Of Organization Characteristics On Sustainable Competitive Advantage During Strategic Change In Airlines. European Journal of Business and Management, 5(7), 145-156.
Ruiz, C. A. D. (2013). Assembling market representations. Marketing Theory, 1470593113487744.
B. Casado-Diaz, A., L. Nicolau, J., Ruiz-Moreno, F., and Sellers, R. (2014). Industry-specific effect of CSR initiatives: hotels and airlines. Kybernetes,43(3/4), 547-564.
Emboaba Moreira, M. (2014). An analytical model for the assessment of airline expansion strategies.
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