Tap Air Portugal Interium Report

Topics: Strategic management, Management, Airline Pages: 7 (1732 words) Published: May 13, 2008

2The Airline Industry Analysis5
2.1The Industry Competitive Analysis5
2.1.1Potential New entrants5
2.1.2Power of buyers5
2.1.3Power of Suppliers5
3Strategic Groups6
4External Factors that can affect the industry7
4.1Political and Legal7
5Key Factors of success in the industry8
6Key drivers of change in the industry8
7TAP internal analysis9
7.1Core Competences9
8SWOT Analysis10
8.1Internal Analysis10
8.2External Analysis11

List of figures

Figure 1: Airline industry Value of Chain adapted from Michael E. Porter,12


In this report first at the environment level, a Five Forces analysis of the industry is conducted, illustrating the high levels of competitive rivalry in the industry. Next a PEST analysis of the Global Airline Industry is conducted, highlighting the in the social, economic, technological and political factors followed by the Key Factors o Success, the strategic groups threat’s and opportunities. Finally in the company level an analysis of the Core Competences is conducted in order to analyze the competitive advantage of the company in the industry and their strengths and weaknesses.

2The Airline Industry Analysis
2.1The Industry Competitive Analysis
Porter’s 5 forces framework aims to analyze the attractiveness of the industry through joint action of the factors that typically surround the industry. 2.1.1Potential New entrants
Potential of new entries involving high barriers to entry due to: •Need of initial capital, as it is necessary to purchase aircraft. Another cost to consider is the information system essential to decision-making; •Difference in cost extra-wide because of the preference given by current competitors on the choice of slots, terminal boarding and other services. The very congested airports can function as a barrier to entry; 2.1.2Power of buyers

Negotiating power of customers is characterized by being, in general terms low, a consequence of an abundant proliferation of various types of customers. 2.1.3Power of Suppliers
Negotiating power of suppliers tends to be:
High for workers and technical expertise as well as for airports, especially as regards the allocation of slots or terminal boarding; •Low power of suppliers of cleaning and catering by offering products undifferentiated; •Average power for suppliers of aircraft and maintenance services, due to the requirements of quality and the cost of change. 2.1.4Substitutes

Substitutes can be other transports such as trains, ferries, and coaches. In the European market the high-speed train can compete directly with airlines for routes of short or medium range. The low-cost airline Buzz seeking to expand their routes in the French market, took account of the destinations Trains operated by the TGV. 2.1.5Rivalry

The rivalry is intense and motivated by:
The companies face high fixed costs;
Competitors in the industry are numerous and balanced;
there is little product differentiation;

The air transport sector show a low potential for new entries, a low pressure of substitutes and low negotiating power of customers. However the rivalry between competitors is high and the current negotiating power of suppliers is variable, and, in general terms, medium / high.

3Strategic Groups

In the airline industry two main strategic groups stand up, flag airliners and Low-cost airliners. The Flag Airliners group is characterized by the Network or Hub-and-Spoke business model. The Hub and Spoke system allows the airlines to maximize passenger occupation on each flight by offering connections to both domestic and international destinations by using their own Hub (airports used as a distribution centre for air...
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