...Through Their Expansion Plans, How will Porter Airlines Effectively Utilize Their Low-Cost Business Level Strategy to Increase Their Customer Base? Table of Contents Executive Summary…………………………………………………………………….p. 3 Porter Airlines…………………………………………………………………………..p. 4 The Expansion..………………………………………………………………………...p. 4 What is Organizational Strategy………………………………………………………..p. 7 Porter Airlines Business Level Strategy………………………………………………..p. 9 Core Competencies …………………………………………………………….p. 9 Competitive Advantage………………………………………...………………p.12 Low Cost Business Level Strategy………………………………………...…..p. 13 Low Cost Business- Level Structure………………………………………………….p. 15 Conclusion…………………………………………………………………………….p. 17 Appendix……………………………………………………………………………...p. 18 References…………………………………………………………………………….p. 20 Executive Summary Porter asserts that their secret to success relies in combining a low-cost business-level strategy with a focus on higher yield passengers who value premium service (Preville, 2014). The company has been profitable for the last two years, and as a result has been focusing efforts on expanding their domain and customer base. After conducting an interview with an operations manager at the company, Ashley Hammill, I was able to acquire information about the company’s expansion plans, business strategy and structure (See Appendix A). I will be using the information provided by her primarily, with some secondary sources allowing me to go into further detail about the company....
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...Micheal Porter projected five forces model in capacity to analyze competitive strategy of the management in any industry. These forces hold an exigent spectrum of importance in the airline industry because of enormous market saturation. The concentration of airline service providers in the market are more than the actual needed demand. Due to immense competition, the level of competition is enhanced within the complex market offering in terms of technology, prices, in-flight entertainment, customer services, and so on. Hence, this paper is presented to analyze the Porter’s five forces model in the horizon of airline industry. Porter has also given the more enhanced framework of forces by including the sixth force as well, which will subsequently be analyzed according to said industry. Porter’s Six Forces Model Analysis The extension of Porter’s five forces model is actually regarded as Porter’s six forces model. The enhanced stimuli of forces did not gain such popularity as that of its previous model integrating five forces only, because of its less positive acceptance. The model is similar to the five forces model with only difference of sixth force in the framework. Hence, all Porter’s (1980) forces are explained below with their certitude rating in the parameters of airline industry. Force 1: Threats of New Entrants The threat of new firm into the same industry is the force which describes the dependability of new entrants on the entering barriers. These barriers...
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...Five Forces model of Airline Industry Air travel has changed the way people live and experience the world today. The airline industry is a strategic sector that plays a fundamental role in the globalization of other industries since it promotes tourism, world trade, foreign investment and, therefore, leads to economic growth. However, all airlines within the industry operate in a highly dynamic environment where various legal, social, technological and economic forces interact with each other, thus influencing their decisions and actions In the industry where airlines can face severe financial distress due to oil crisis, recessions and terrorist attacks, In order to survive, as well as succeed, the business needs to assess its competitive environment and identify key factors that may influence its actions (Porter, 1998, p.45). The airline industry is very competitive and Michael Porter’s five-forces model can be used to analyse the intensity of the competition and the profitability of this industry. Porter’s five forces model is a business unit strategy tool which is used to make an analysis of the value of an industry structure (Hubbard, 2004, pg 35). The analysis is made by the identification of 5 fundamental competitive forces. These include: Threat of new entrants is high One of the forces identified by this model is the threat of new entrants which refers to the possibility of new competitors entering the industry and undermining the profits of the established...
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...and above. Students: Please note there is no need to place the basic strategy models in the appendices e.g. Porter’s (1985) Five Forces, SWOT analysis, etc.. It would be more beneficial to apply the models directly to the organisation and place them in the appendices and discuss the main identified issues in the main text. 2 Corporate Strategy: Emirates Airline By Student How has Emirate airline managed to remain competitive in such a saturated industry? Emirates Airline “An exceptional journey from start to finish” (Emirates, 2010). 3 Introduction: ............................................................................................................................... 4 Background to Emirates Airline: ............................................................................................... 4 Competitive Advantage: ............................................................................................................ 5 Porter’s five forces: .................................................................................................................... 5 Competitive Rivalry: .............................................................................................................. 6 Threat of new entrants:...
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...dominant flagship airline in New Zealand. At present the airline more or less controls the majority of the New Zealand domestic market. The airline also operates on several global international routes. Since Ralph Norris was appointed as Managing Director and CEO of Air New Zealand in February 2002, Air New Zealand has been working on its new strategic direction. After the business transformation program, the structural changes in the marketplace made a new direction indispensable and Air New Zealand is turning to align its route and service standards to customer needs from inflexible service offerings. Meanwhile, Air New Zealand is developing from a full service airline into the direction of a value-based airline which involves lower fares and more customers. Reduced revenues (per customer) should be off- set by lower operating costs mainly achieved by simplification of product bundles and services. (Airline to put profit on menu.UBS Warburg Conference, 2003, p.11 ) The following table gives an overview of the key aspects of Air New Zealand is facing after the new strategic direction launched, as we can seen as SWOT analysis. Figure 1 SWOT analysis Strengths-Well established system and strong operational network Marketing programs.-One of the earliest members of the Star Alliance, it flying 25 domestic and 23 international destinations and covering 16 countries approached at different cities in Asia, Pacific, North America and Europe.-Rate of receives industry awards for its...
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...the average competitor in the product market (Porter,1980).Companies seek to use their understanding to outline their market offers to deliver more value to the customers. They do so by applying competitive strategy; which according to Porter (1980) is the search to find a favorable competitive position in an industry. It aims is to establish profitable and sustainable position against the forces that determine industry competition. Therefore competitive strategy is about beating the competition. To achieve such goals Michael Porter and other advocates such as Mintzberg, McGee and Bowman suggested few market positioning approaches and models. The three main approaches are Porter Generic Competitive Strategies, Mintzberg market positioning and customer matrix. To add up, models such as product life cycle, Porter Five forces model, Strategic Grouping and Scenario planning also help to formulate the competitive strategy of a business. Porters Five forces model is the key influence to other models. This model determines industry profitability because it influences the price, cost and return on investment. Porter believes that the five forces is more than just competing with direct competitors but also fighting for profits. In any industry no matter what it produces whether product or service of any type, there are five bases of competition at work. For instance take an airline industry the level of rivals is high as the other airlines compete closely for global market share and growth...
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...Strategic Management: Porter Analysis for Civil Aviation Industry Ajay Kr. Dhamija¤(N-1/MBA PT 2006-09) Abstract "The air transportation system has become essential to the economic progress for the citizens and businesses of this nation" The airline industry must: ² Be e±cient and technologically superior ² Have the ¯nancial strength to respond to rapid change and opportunity. ² E±ciently move people, products and services to markets, wherever they exist Airline industry in India is plagued with several problems. These include high aviation turbine fuel (ATF) prices, rising labor costs and shortage of skilled labor, rapid °eet expansion, and intense price competition among the players. But one of the major challenges facing Indian aviation industry is infrastructure constraint. Airline industry in India is plagued with several problems. These include high aviation turbine fuel (ATF) prices, rising labor costs and shortage of skilled labor, rapid °eet expansion, and intense price competition among the players. But one of the major challenges facing Indian aviation industry is infrastructure constraint. We present here the porter ¯ve force analysis of Civil Aviation Industry and hance try to ¯nd out whether it would be advantageous to enter into this industry or not. Keywords: Porter Analysis, Airline Industry , Available Seat Mile, Revenue Passenger Mile , Revenue per Available Seat Mile , Air Tra±c Liability , Load Factor , Threat of New Entrants , Bargaining...
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...Budget airline industry has been profitable during last decade, and particularly Ryanair, as the largest European budget airline company has been vital in this area. Its success in past, issuses nowadays and importantly the sustainablility has drawn significant attention and offered a great oppourtunity for research. This case study will analysis the budget airline through its business model, evironment and industry and finally focus on Ryanair’s strategy position in order to explore its sustainability in future. The framework is briefly illustrated by following figure. Figure 1: Brief Framework of this Case Study The budget airline business model The first company in history to suggest the budget airline business model to the world was Southwest Airlines (SWA) in Texas, USA. At the beginning of 1970s, this company have launched first flights between three major cities in Texas i.e. Houston, Dallas and San Antonio at a price of 20 dollars, which was initiative at that time. It marked itself as budget airline and initiates a business model allowing it to offer scheduled flights service at a very low fare. It would focus on short-distance flights of typically 600 km or one hour with high traffic efficiency. Many strategic approaches of budget airline business model’s operations differ from the more traditional of full service airlines model. 6 main factors can be identified, which are illustrated in the table below: Budget airline | Full service airlines | ...
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...fundamental business strategy tools (including industry analysis, competitive strategy and resource and capability tools) and techniques to the formulation and analysis of value creation and capture at a strategic level. Porter 5 Force analysis Porter framework assumes: 1. industry structure drives competitive behaviour 2. Industry structure is (fairly) stable. [pic] Case: Airline Industry …. Porter’s 5 forces – purpose: Identifying the different stakeholders, or ‘forces’, which affect: • The level of competition in an industry. • The ability of a company to become powerful in that industry. Threat of New Entrants : • Company’s Point of view • Industry Point of view • Huge Capital Required • High Maintenance Cost • Brand Identity. • Govt. Policy Supplier’s Bargaining Power • Aircraft Manufacturers • Fuel Companies Buyer’s Bargaining Power • Travel Agents • Business Travelers Threat Of Substitute • Railway service • Bus service • Water Transport • Video conferences (for business flyers) Competitive Rivalry • Highly Competitive Industry. • Can work as growth driver for Industry. External Analysis: Porter’s Five Forces Threat of New Entrants HIGH Threat of Substitute Products MEDIUM Buyers’ Bargaining Power LOW Suppliers’ Bargaining Power LOW Industry Competitors Rivalry Among Existing Firms HIGH ...
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...Porter's 5 forces analysis on Air Asia Porter's 5 forces analysis on Air Asia Threat of new Entrants The extent of barriers to entry depends on the strength of: Customer has little brand loyalty. If consumers of Air Asia do not have brand loyalty, then the strength of the threat of new entrants is very high. The high numbers of competitors in the industry also decrease Air Asia customer loyalty. Most of the travelers prefer low cost. New competitors which want to come in the industry have to spend little to compete with Air Asia. High capital requirement. The industry of airline needs large volume of start-up capital. The cost of setting up of offices, buying or leasing aircraft, hiring pilots and other staffs like air stewardess and etc incur a high start-up cost. Thus, the threat is low for Air Asia. Different product offered. Air Asia offers different product compared to other competitors in Asia like Bangkok Airways, Tiger Airways, and Air Philippines. Other than the passenger sales ticket, Air Asia also include holiday packages which is affordable around Asia. Air Asia has good connection with hotels and tourism companies around Asia, which it is hard for new competitors to compete. Low switching costs. Customers do not need to spend more on switching to another airline. The price would not be very significant in differences, which it depends on the availability of competitor’s services and suitability of the flight time that prompts them to switch. Moderate...
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...3 Ryanair’s external environment analyses (PESTEL)…3 Ryanair’s internal strategic capabilities (SWOT)……...4 Ryanair’s strategic choice (Porter’s five forces)………5 VRIO framework……………………………………………..5 Rumelt’s criteria……………………………………………..6 Ryanair’s implementation of low cost strategy………..6 Recommendations………………………………………….6 Conclusion…………………………………………………...7 Reference List……………………………………………….7 Appendix………………………………....…………………..8 12.1 Presentation’s slides…………………………………8 Word count 1,744 (excluding reference list and appendix) 2 Besmir Lika 1.0 Introduction Strategic Management Individual Report Richard Jump The notion of underlying the concept of generic strategies is that competitive advantage is at the heart of any strategy, and achieving competitive advantage requires a firm to make a choice, if a firm is to attain competitive advantage, it must make a choice about the type of competitive advantage it seeks to attain and the scope within which it will attain it (Porter, 2004). The purpose of this report is to assess the key strategies chosen by Ryanair within cost leadership and that were likely to generate competitive advantages to the organisation. Furthermore, this paper will analyse the Ryanair’s decision to become a low cost airline through Porter’s five forces. It will help to understand the industry attractiveness and competitive forces. PEST analyses will be directed in order to analyse the business environment where Ryanair operates. SWOT analyses will be...
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...Group Project: Air Canada Part 1: societal environment trends 1. Fuel prices: Oil price is highly related to the cost of air industry. According to Algoe, as the oil price increase, airline will spend more on fuel cost, which will have a direct impact on the cost of operation. Even in good time fuel costs constitute roughly 10-12% of operating expense. In addition, fuel cost increases will bring bad impact on economic, which in turn result in a substantial decline in demand for air travel and air cargo. Every penny increase in the price of jet fuel costs the airline industry $180 million a year. For Air Canada, this change would decrease their profitability and company performance. SAS Group reported that the global economic climate is weak, Jet-fuel prices and capacity continue increasing in next few years. High fuel prices presented a significant challenge for the entire aviation industry. Therefore, we consider fuel price is a threat for Air Canada doing their business. Retrieved from http://saraalgoe.hubpages.com/hub/rise-in-fuel-prices-airline-industry http://www.cisionwire.com/sas/r/sas-group-interim-report-january-march-2012,c9254790 2. GDP: According to Trading Economics, the Gross Domestic Product (GDP) in Canada expanded 0.4 percent in the fourth quarter of 2011 over the previous quarter. Historically, from 1961 until 2011, Canada’s GDP Growth Rate averaged 0.8 percent reaching an all-time high of 3.3 percent in December of...
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...Substitute……………………………………………………………………………2.2.5. Rivalry…………………..…………………………………………………………………………... | 777888 | 2.3. THE ORGANISATION…………………………………..………………………………………………2.3.1. Organisational Structure……………………………………………………………………..2.3.2. Walter’s Model…………………………………………………………………………………… | 8910 | 3. CONCLUSION……………………………………….…………………………………………………… | 12 | 4. APPENDIX…………………………………………………………………………………… | 13 | 5. BIBLIOGRAPHY…………………………………………………………………………… | 14 | 1. INTRODUCTION This report will discuss the impact of recent technological advancement in a particular industry. It will explore how the use of information systems, knowledge management and communication technology has enabled the implementation of business information and how it has impacted change on the organisation. It will explore the general environment, immediate environment and the organisation itself, each section will be broken down into smaller headings to enable easy understanding of the report. The company chosen for this report is TUI Fly. TUI Fly is an airline company under TUI AG group which is a large company in the tourism industry and it also operates worldwide. TUI Fly was formed after a merger between Hapag-Lloyd Express (HLX) and Hapagfly in 2007 and has a route of “…74 destinations in 16...
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...zxcvbnmqwertyuiopasdfghjklzxcvbn mqwertyuiopasdfghjklzxcvbnmqwerty uiopasdfghjklzxcvbnmqwertyuiopasdf ghjklzxcvbnmqwertyuiopasdfghjklzxc vbnmqwertyuiopasdfghjklzxcvbnmqw ertyuiopasdfghjklzxcvbnmqwertyuiop asdfghjklzxcvbnmqwertyuiopasdfghjk lzxcvbnmqwertyuiopasdfghjklzxcvbn mrtyuiopasdfghjklzxcvbnmqwertyuiop asdfghjklzxcvbnmqwertyuiopasdfghjk lzxcvbnmqwertyuiopasdfghjklzxcvbn 11/11/2011 xxxxxxxxxx SIM336 i “How has Ryanair managed to become number one airline in Europe” Table of Contents 1. 2. 3. 4. 5. 6. 7. 8. 9. Introduction ..................................................................................................................... - 3 Company Background..................................................................................................... - 3 Competitive Advantage ................................................................................................... - 4 Porter’s five Forces ......................................................................................................... - 5 PESTEL Analysis ............................................................................................................ - 8 Porter’s generic strategies ............................................................................................ - 12 Conclusion .................................................................................................................... - 15 Bibliography ............................................................
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...strong competitive edge in Airline industries. BA is a leader in airline operators in UK which face a lot of competition in the last decade. This report will analysis, identify and evaluate strategic choices that BA could pursue both internal and external environment forces. Some of the strategic will includes the strategy gap of BA. Through this strategic, we have recommended that BA should focus on their communication, planning, forecasting and strategy formulation to restore their competitive advantage within the industry. Table of contents Table of contents 1.1 Report objectives 1.2 Company overview 1.3 Strategy gap 1.4 Current strategies 2.0 External Analysis 2.1 PESTEL Analysis 2.2 Porters’ five forces 3.0 Internal Analysis 3.1 Resource based view 3.2 Value Chain 4.0 Key strategic Issues 5.0 Strategy formulation 6.0 Conclusions 7.0 Recommendations 1.1 Report Objectives The main objective of this report is to recommendation a good strategy for BA. This report will consist of sections which includes the followings: To found out the current strategic position of BA, Analysing the internal and external environment forces of BA, recommend strategic options using the internal and external analysis, evaluate strategic choices that BA could pursue and discuss the implementation. 1.2 Company Overview British Airways Plc is the number Airline in UK and one of the best Airlines in the world which operates...
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