How apply porter' five competitive forces on an airline?

Answer 1

Porters 5 forces is a concept, I can't understand what exactly do you want to know but still I write all the forces and some examples;

1. The threat of entry ...

Dependent on barriers to entry such as:

-economies of scale

-capital requirements of entry

-access to supply or distribution channels

-customer or supplier loyalty

-experience

-expected retaliation

-legislation or government action

-differentiation

2. Threat of substitutes

Reduction in demand for products as customers switch to alternatives:

-Product for product substitution e.g. email for post

-substitution of need e.g. reliable and cheap appliances reduce need for maintenance services

-generic substitution:competition for household income e.g. cars versus holidays and doing without

3. Buyer power

it is likely to be high where there is:

-a concentration of buyers

-many small operators in the supplying industry

-alternative sources of supply

-switching costs are low

-components/materials are a high percentage of cost to the buyer leading to "shopping around"

-a threat of backward integration

4. Supplier power

it is likely to be high where there is:

-a concentration of suppliers

-customers are fragmented and bargaining power low

-switching costs are high

-the supplier brand is powerful

-integration forward by the supplier is possible

5. Competitive Rivalry

it is likely to be high when:

-competitors are in balance

-there is slow market growth (product life cycle)

-there are high fixed costs in an industry

-there are high exit barriers

-markets are undifferentiated