Porter Airlines

Topics: Porter generic strategies, Marketing, Southwest Airlines Pages: 8 (2655 words) Published: March 19, 2011
1.Threat of New Entrants - The easier it is for new companies to enter the industry, the more cutthroat competition there will be. Factors that can limit the threat of new entrants are known as barriers to entry. Some examples include:

Existing loyalty to major brands
Incentives for using a particular buyer (such as frequent shopper programs) •High fixed costs
Scarcity of resources
High costs of switching companies
Government restrictions or legislation

Power of Suppliers - This is how much pressure suppliers can place on a business. If one supplier has a large enough impact to affect a company's margins and volumes, then it holds substantial power. Here are a few reasons that suppliers might have power:

There are very few suppliers of a particular product
There are no substitutes
Switching to another (competitive) product is very costly •The product is extremely important to buyers - can't do without it •The supplying industry has a higher profitability than the buying industry

Power of Buyers - This is how much pressure customers can place on a business. If one customer has a large enough impact to affect a company's margins and volumes, then the customer hold substantial power. Here are a few reasons that customers might have power:

Small number of buyers
Purchases large volumes
Switching to another (competitive) product is simple
The product is not extremely important to buyers; they can do without the product for a period of time •Customers are price sensitive

Availability of Substitutes - What is the likelihood that someone will switch to a competitive product or service? If the cost of switching is low, then this poses a serious threat. Here are a few factors that can affect the threat of substitutes:

The main issue is the similarity of substitutes. For example, if the price of coffee rises substantially, a coffee drinker may switch over to a beverage like tea. •If substitutes are similar, it can be viewed in the same light as a new entrant.

Competitive Rivalry - This describes the intensity of competition between existing firms in an industry. Highly competitive industries generally earn low returns because the cost of competition is high. A highly competitive market might result from:

Many players of about the same size; there is no dominant firm •Little differentiation between competitors products and services •A mature industry with very little growth; companies can only grow by stealing customers away from competitors

Comparison of successful air line with porter airlines:
South west air lines:
One Plane Fits All
Unlike the network carriers and their commuter surrogates, which operate all manner of regional jets, turboprops, and narrow-body and wide-body aircraft, Southwest flies just one plane type, the Boeing 737 series. That saves Southwest millions in maintenance costs—spare-parts inventories, mechanic training and other nuts-and-bolts airline issues. It also gives the airline unique flexibility to move its 527 aircraft throughout the route network without costly disruptions and reconfigurations. Point-to-Point Flying

Network carriers rely on a hub-and-spoke system, which laboriously collects passengers from "spoke" cities, flies them to a central "hub" airport, and then redistributes them to other spokes. Not Southwest. Most of its flying is nonstop between two points. That minimizes the time that planes sit on the ground at crowded, delay-prone hubs and allows the average Southwest aircraft to be in the air for more than an hour longer each day than a similarly sized jet flown by a network carrier. Southwest's avoid-the-hubs strategy also pays dividends in on-time operations. According to FlightStats, Southwest's 78 percent on-time performance in June is eight percentage points higher than the industry average and higher than that of any of its major competitors. Simple In-Flight Service

Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Porter Airlines Essay
  • Leadership Analysis: Emirates Airlines Essay
  • Porter Essay
  • Porter Airlines Essay
  • Singapore Airlines Analysis Essay
  • Porters 5 Generic Strategies Essay
  • Essay about Easy jet airline
  • Case Study- “Ryanair: the Low Fares Airline- Future Destinations?” Essay

Become a StudyMode Member

Sign Up - It's Free