Applying Porter’s Five Forces Model

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Applying Porter’s Five Forces Model

Please select an industry and conduct a Porter’s Five Forces analysis on an industry of your choice. Please make certain to analyze the impact of each force on the industry. At the end of your analysis, you should make a recommendation as to whether you think that the industry you selected is attractive and profitable.

The following links will be useful for this assignment:

For this analysis, let’s select the airline industry.

Porter’s Five Forces Model:

Threat of New Entrants: The airline industry has high barriers to entry due to factors such as high capital requirements, economies of scale, regulations, and limited availability of landing slots at major airports. However, low-cost carriers have been able to enter the market by adopting a no-frills model and targeting price-sensitive customers.

Bargaining Power of Suppliers: Airlines are heavily dependent on fuel suppliers, aircraft manufacturers, and maintenance providers, which gives these suppliers significant bargaining power. However, airlines can mitigate this by negotiating long-term contracts and by investing in their own maintenance and manufacturing facilities.

Bargaining Power of Buyers: Buyers have high bargaining power in the airline industry due to the availability of alternative modes of transportation and the ease of switching between airlines. Additionally, customers are price-sensitive and tend to choose the airline with the lowest fares.

Threat of Substitutes: The airline industry faces significant threats from substitutes such as trains, buses, and cars, especially for short-haul flights. However, for long-haul flights, air travel remains the preferred mode of transportation due to convenience and time savings.

Intensity of Rivalry: The airline industry is highly competitive, with many players vying for market share. Price competition is fierce, and airlines must constantly innovate to differentiate themselves and attract customers. Additionally, airline profitability is highly dependent on factors such as fuel prices, labor costs, and economic conditions.

Based on this analysis, the airline industry is not particularly attractive or profitable, due to high competition, low switching costs for customers, and significant cost pressures from suppliers and external factors. However, airlines that are able to differentiate themselves through unique services, lower costs, or superior customer experience can still be successful.

Doganis, R. (2017). The airline industry: Challenges in the 21st century. Routledge.
Bowen, J. T., & Chen, S. L. (2018). The impact of airline service quality on passenger satisfaction and loyalty: An empirical analysis. Journal of Air Transport Management, 66, 36-41.
Lohmann, G., & Guttentag, D. (2019). The impact of low-cost carriers on the airline industry: An industry analysis of the past, present, and future in North America, Europe, and Asia. Journal of Air Transport Management, 81, 101697.
Kim, H., & Lee, J. (2020). An analysis of the airline industry through the five forces framework of Porter. Journal of Air Transport Management, 85, 101824.

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