Business plan
Conduct an analysis for your business.
Part 2B Strategic Positioning and SWOT analysis.
Force: Threat of Entrants
Airline Industry - South West Airlines
1)
Break even Point: How many products do you need to sell to break-even.
The more you need to sell to breakeven the lower the threat of entrants. A medium number of airline tickets need to be sold to breakeven. It may not be an extremely high number as the costs associated with business can be reduced by leasing rather then buying planes. 2)
Economies of Scale: If you produce more does the unit cost decrease, does your business reduce costs. If your business has high efficiency then other businesses find it hard to compete, when they first start.
The better existing businesses economies of scale the lower the threat of entrants.
Economies of Scale can be achieved if the airline can sell a large number of products. However in an industry with high competition this can be difficult to achieve for a long time.
3)
Capital requirement of entry: How much money is required to start the business.
The higher the startup costs the lower the threat of entrants.
Capital can be low if ‘leasing’ rather than buying planes. 4)
Access to distribution channels: How many retail outlets are owned by manufacturers.
The more retail outlets owned by manufacturers the lower the threat of entrants.
No problems as an airline business can use the internet to sell tickets.
5)
Government action and Legislation: Patent protection
(does the government stop other businesses from copying the products or services of your business)
The higher the government protection the lower the threat of entrants. 6)
Experience: Early market entrants gain experience more quickly. The more experienced competitors in the industry the lower the threat of entrants.
There is no government protection for the Airline industry, although some brand protection does exist. However there is
Part 2B Strategic Positioning and SWOT analysis.
Force: Threat of Entrants
Airline Industry - South West Airlines
1)
Break even Point: How many products do you need to sell to break-even.
The more you need to sell to breakeven the lower the threat of entrants. A medium number of airline tickets need to be sold to breakeven. It may not be an extremely high number as the costs associated with business can be reduced by leasing rather then buying planes. 2)
Economies of Scale: If you produce more does the unit cost decrease, does your business reduce costs. If your business has high efficiency then other businesses find it hard to compete, when they first start.
The better existing businesses economies of scale the lower the threat of entrants.
Economies of Scale can be achieved if the airline can sell a large number of products. However in an industry with high competition this can be difficult to achieve for a long time.
3)
Capital requirement of entry: How much money is required to start the business.
The higher the startup costs the lower the threat of entrants.
Capital can be low if ‘leasing’ rather than buying planes. 4)
Access to distribution channels: How many retail outlets are owned by manufacturers.
The more retail outlets owned by manufacturers the lower the threat of entrants.
No problems as an airline business can use the internet to sell tickets.
5)
Government action and Legislation: Patent protection
(does the government stop other businesses from copying the products or services of your business)
The higher the government protection the lower the threat of entrants. 6)
Experience: Early market entrants gain experience more quickly. The more experienced competitors in the industry the lower the threat of entrants.
There is no government protection for the Airline industry, although some brand protection does exist. However there is