Porter’s Five Forces and Competitive Strategy
Threat of Rivalry3
Threat of New Entry4
Threat of Substitute Products5
Bargaining Power of Buyers6
Bargaining Power of Suppliers7
Recommendation of Porter’s Five Forces Strategies8-9
Hofstede’s Cultural Dimensions 10-13
Recommendation of Hofstede’s Cultural Dimensions Model14-15
The purpose of this report is to determine the suitability of Safety Airlines Ltd. expansion of business into Australia. The Porter’s Five Forces is used as a guideline of the competitive nature of the Australian domestic airline industry. An analysis of the airline industry context in Australia is made where the threats are identified and what strategies are to be employed to determine the competitive advantage for Safety Airlines Ltd. From the analysis, Porter’s Five Forces showed that the threats are low. This indicates that the market in Australia is attractive for the company. It is recommended that Safety Airlines LTD should adopt the cost leadership and differentiation strategy in order to complete with Australia domestic airline company successfully.
The Hofstede’s Cultural Dimensions is employed to analyze the similarities and differences between the Australian and French culture. An in depth analysis of the Australian culture is fundamental for the understanding of the managers of Safety Airlines to bridge the cultural gap and determining the need to modify one’s managerial style. In addition, Hofstede’s cultural dimensions show that there is just a small difference between the culture of Australia and France. Moreover, some recommendations are adopted based on the analysis and last followed by the conclusion.
Safety Airlines Ltd. is a well –established French Aviation Company from Paris, France. The company has been in operation since 1988 and today is it the largest budget airline company in France in terms of its total operating revenues, ranking as the fifth largest in the world in terms of passenger fleet size.
Safety Airlines is now planning to compete with Australia domestic airlines industry. By analyzing using Porter’s five forces and Hofstede’s cultural dimensions to gather information before expanding into Australia market.
3.0Porter Five Forces:
3.1 Threat of Rivalry
The threat of rivalry for Safety Airlines is high. Virgin Blue, Qantas and Jetstar have been identified as the three main rivalries for Safety Airlines. In 2007, market share for Virgin Blue was 28.53%, Qantas was 27.68% while Jetstar 15.81%. This shows that only these three has occupied a market share of 72.02% (Hitwise Press Release 2007). In order to gain higher market share in market, companies should avoid price-based competition, and try to offer efficient services to lure in customers.
The airline industry growth in Australia is strong where the aviation sector has grown more than 66% and in 2007 the aviation sector has expanded its market to 6.31 millions (Singleton J. 2008). Besides buyers are easy to switch between airlines companies, this increases the rivalry (Airlines and Strategic Management 2008). With high growing rates, a company can easily enter the market.
Product differentiation for domestic airlines routes in Australia is important as it distinguishes one airline apart from another. For example, Qantas covers most domestic routes while Virgin Blue flies between big cities (Flying within Australia: Domestic Routes and Schedule 2009). The different airlines routes offered by different companies are meeting the buyers demand for transport and they will purchase the tickets in disregard of the...