Porter's 5 forces - how they work, 3 examples, and why it's better to be a thief Posted by Vincent van Wylick at 2: Porter, illustrates the biggest factors that may enter into the strategic decision-making process.
By assessing the Political, Economic, Social, Technological, Environmental and Legal factors, the Opportunities and Threats can be faced by a company can be identified. Future trends and requirements for change based on these trends can be identified through this analytical tool Johnson, et al, Political and Legal factors Southwest Airlines domestic operations are significantly influenced by government bodies; primarily Federal Aviation Administration FAA see www.
Recently, a law has been passed to repeal the Wright Amendment to be in effect in Thompson and Gamble, Southwest Airlines has on numerous occasions won legal battles against rivals in the US courts Thompson and Gamble, Economic factors Airline industry is severely affected by fuels costs.
A rise in the price of oil has a major impact upon Southwest Airlines profitability Mouawad, Social Factors Southwest Airline has a strong commitment towards customer service Thompson and Gamble, Campbell, Technological factors Technological developments have both created new opportunities as well as threats for Southwest Airlines.
Emergence of information and communication technologies has enabled robust communication and subsequently provided customers with an alternative for frequent travelling. It has also enabled Southwest Airline to expand its outreach directly to consumers through e-commerce. For instance, Southwest Airlines was able to introduce ticketless travel through the use of technology Thompson and Gamble, Southwest Airlines reservation system is considered to be outdated.
It needs to update so that the company can sell international tickets, provide passport information to federal authorities, and better handle customer relationships, along with other services Mouawad, Aircraft emissions cause significant damage to the atmosphere Penner et al.
The community noise is another major environmental concern. Noise from the air traffic is not only the reason for irritation and an unpleasant experience and has serious health issues. The Five Forces analysis is as follows: Competitive Rivalry The competitive rivalry in airline industry has been increasing especially through mergers and acquisitions.
They are offering their passengers access to numerous cities throughout the US and connecting them to four continents of the world which Southwest Airlines does not do Mouawad, Moreover, new rivals have emerged following the footsteps of Southwest.
Entry Barriers There are high barriers to enter this industry as it requires a large initial capital investment. In conjunction with the price wars and low profit margins, it has become difficult to make profit in this industry. It is very common for airlines to project losses in their financial statements.
Therefore a new entrant must be able to handle losses at the beginning. Another barrier to entry is the limited availability of landing slots at the US airports. The slots are already reserved by established airlines and are difficult to obtain especially in airports with high passenger demand Czemy The Bargaining Power of Suppliers, one of the forces in Porter’s Five Forces Industry Analysis Framework, is the mirror image of the bargaining power of buyers and refers to the pressure suppliers can put on companies by raising their prices, lowering their quality, or .
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Porter’s five forces In order to analyze the industrial environment of Southwest Airlines and evaluate the nature of the competition faced by the company, this essay uses Porter’s Five Forces tool developed by Porter E.M (Porter, ).
Competitive Analysis of DELL using Porter’s Five Forces Model Dell Company was founded in by Michael Dell. It is the world’s largest direct-sale computer vendor; Dell Inc. is now also the leading seller of computer systems in the world, capturing a global market share of more than 15 percent.
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