The airline industry has five forces: the bargaining power of the buyers, the bargaining powers of the suppliers; the threat of the new entrants; the competitions’ rivalry; and the threat of the new substitutes (Porter, 2008). As a chief strategy officer for a new airline in the industry, I would first recognize the high power of the buyers in the industry based on the fact that flight is the fastest and most convenient way of travelling. This therefore, explains the constant variance in the change of the ticket pricing. While other means of transport may be relatively cheap, they take a lot of time and inconvenience the buyers. However, in cases where the buyers tend to often change to other airlines, there is needed to come up with reward system for the buyers.
It is as well important to note the high power of the suppliers especially Airbus and Boeing (Dobbs, 2014). Nonetheless, planes have the same materials and there is no chance of a supplier offering different products. It is either the eco-friendly materials or low cost materials that make the difference in suppliers. More importantly, some suppliers may settle for long terms contracts with the airline. This contract prevents the need for a new supplier. Basically, there can be prevention of new suppliers into the market through the high cost of making planes so as to reduce the number of competitors in the market. However, there is a medium threat of new substitutes based on the conveniences in terms of time.
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References
Michael E. Porter (2008). The Five Competitive Forces That Shape Strategy. Retrieved from https://hbr.org/2008/01/the-five-competitive-forces-that-shape-strategy
E. Dobbs, M. (2014). Guidelines for Applying Porter's Five Forces Framework: A Set of Industry Analysis Templates. Competitiveness Review , 24 (1), 32-45.
