Customer has little brand loyalty. If consumers of Air Asia do not have brand loyalty, then the strength of the threat of new entrants is very high. The high numbers of competitors in the industry also decrease Air Asia customer loyalty.
How to Write a Summary of an Article? Porter claimed that there are five competitive forces which can shape every industry by identify and analysis those five forces appendix and thus determine strengths and weaknesses of the industry.
Threat of Entry There is a high barrier entering airlines industry since it requires high capital to set up everything such as purchase or lease air craft, set up office, hire staffs, and etc. Moreover, brand awareness is quite important in this industry.
Thus, to enter this industry not only required high capital but also have to take some time to create brand awareness. Consumers always choose the product or service they really trust. Thus, instead of creating brand awareness, new entry has to create so called brand loyalty. Hence, this is reducing treat to Air Asia too.
Simerly However, the government legislation is one of the barriers for entering airlines industry. Therefore Air Asia find itself very difficult getting a new route from government.
This not only affects the timeline set by Air Asia but also influence their profit. Power of suppliers Every industry has someone to play the role as suppliers. Power of the suppliers is important as it will affect the industry. In airline industry, the power of suppliers is quite high since there are only two major suppliers which are Airbus and Boeing hence there are not many choices to airline industry.
Nevertheless, the global economic crisis has limited the new entrant and also reducing the upgrade of planes in the immediate future. However, both suppliers provide almost same standard aircrafts and hence the switching to Air Asia is low.
Moreover, Air Asia placed a large amount of order from Airbus in order to expand its routes to international routes. Simerly Power of buyers Buyers are one of the factors which will give influence the industry whether making profit or loss.
Nowadays, those buyers are much more knowledgeable and high educated. Thus, they are very sensitive to the price no matter in what product or service.
In this case, even Air Asia always provide lowest price to customers, but they still will make comparison between airlines. Secondly, to switch to other service is very simple because Air Asia is not the only one who provides airline service.
Simerly Moreover, Air Asia always leaves customers an image as they always delay the flight. Hence, as an investor or business man, they will choose more reliable airlines instead of Air Asia. Threat of substitutes Substitutes are products or services which can replace the original products or services and give almost same satisfaction to the consumers.
In airline industry, there are two types of substitutes, indirect and direct substitutes.
Indirect substitutes include train, bus, cruise and etc. On the other hand, direct substitutes indicate the other airline. Consumers usually prefer low cost.
For example, from Kuala Lumpur to Singapore, there are few transports that consumers can choose such as bus, train and air travel. If the customer is going to a budgeted trip, definitely he will choose bus which is the lowest price among the three.
Moreover, the technology is now make information much more easily to assess.
Customers can easily compare the price among few airlines just by assessing internet as internet make information more transparency. Nevertheless, the archipelago geographical structure in Malaysia make air travel is the most viable, efficient and convenient mode of transportation.
For example, travel from Kuala Lumpur to Bangkok, the customer may choose to take bus or air flight. However, air plane are much more convenient and also lesser time consuming compare with taking bus to Bangkok. Rivalry among existing competitors In every industry, there is positive or negative trend to industry growth rate.
If there is positive trend, then the firms have not to steal the market share among them. However, in airline industry, the growth rate is really low due to limited customers. Thus, in order to expand, Air Asia has to steal the market share from its competitors.
Simerly Secondly, Air Asia leads the main battlefield in price among competitors due to its low operating costs. Moreover, Air Asia is not the only one who provides airline service.Read this essay on Porter Five Forces of Air Asia.
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Get the knowledge you need in order to pass your classes and more. Only at grupobittia.com". This book presents the attractiveness of the South African airline industry for a new investment penetration by Air Asia. Michael Porter’s five forces model.
Air Asia: Penetrating into the South African Airline Industry College. Those five forces are now used to determined Air Asia’s strengths and weaknesses which are shown as below: Threat of Entry There is a high barrier entering airlines industry since it requires high capital to set up everything such as purchase or lease air craft, set up office, hire staffs, and etc.
Porter's Analysis 5, views. Share; Like; Download Porter’s Five Forces Analysis • Porter’s Five Forces Model: - Introduced by Michael Porter in Michael Porter is Bishop William Lawrence University Professor at Harvard Business School.
Porter’s Five Forces Analysis for Air Asia 4. Bargaining Power of Suppliers. Air Asia- Porter's Five Forces; Air Asia- Porter's Five Forces. Porter's 5 forces analysis on Air Asia 1. Introduction The porter forces model was first developed in by Michael.F.
Porter of the Harvard as structure for assessing and evaluating the competitive position and power of an organization, the model is grounded on the. Porter’s Five Forces – Competitor Analysis Michael Porter’s five forces is a model used to explore the environment in which a product or company operates to generate competitive advantage.
Porter’s Five forces analysis looks at five key areas mainly the threat of entry, the power of buyers, the power of suppliers, the threat of.