I think that this Model is important to use because we can clearly define our current competition which is the main focus of this analysis, and also we can make future decisions that will improve the situation of the business. The Porter's analysis gives us an overall picture of the position of the business and most importantly shows us 5 basic ideas to evaluate our strengths and pay close attention to our weaknesses to better off our business.
This analysis is very effective for the specific business in every industry because if you know how to manage each of the ideas from the analysis, your business will be successful. It is essential to have a clear understanding of the supplier power because they exercise big control over the companies. You as a company have to provide the best relationship between the supplier and you because it is very easy for them not to supply you anymore. The effect on your business will be of extra costs trying to find new suppliers. The business also has to offer the best service to its buyers, I refer to the best quality on the product such as name, label, information so that the buyer feels a need for your product or service.
In every business you are going to find the rivalry but the most benefits you offer the better control of your competition will have. Exercising power over the substitutions of your product or service is vital because if you do not offer uniqueness, quality, and other qualities; it is feasible to acquire or "substitute " your product or service which ends up a a great disadvantage for your business. And as for the power of the barriers to entry the market, I think that this can only be done by keeping inform and always trying to better off your business therefore people trying to compete in your field find it more difficult over the time.
I believe that the Airlines Industry has a tremendous barrier for competitors to enter the market. The costs of enter the market is very high not only for the equipment, machines, labor but also for the costs of advertising. This is an industry that has few competitors but this few have learned how to position their names, labels, services in people's mind. They have power over the buyers because they set up prices according to the season and we as buyers have to adapt to them. Of course this leads to the fact that this industry has to provide an excellent service because since there are very few companies in the market it is easy to swich to another airline and never come back to the previous one. This will affect the company because they can go bankcrupt or sell it to the big companies that are taking competitive advantage over the others.
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Who wants to get in the industry right now given the current supply cost..OOOIIILLLL. Only a few companies- Southwest for example- have been able to hedge successfully against the surge in oil prices. Other companies have been suffering for a long long time. And if Goldman Sachs has it right-oil at $100 a barrel- these companies have a long road ahead of them. Are there barriers to entry? Yes. However, a lean efficiently run company with the financial know how to manage the risk of the volatility in the oil markets I believe they can position themselves very well.
The airline industry is pretty hard to crack. Not only do you have the big airlines already to compete with, you need a huge amount of capital and strategic planning.
One thing is you could do something similar to JetBlue. They don't offer a lot of the amenities the big airlines offer but they're very successful. Perhaps a low cost flight that doesn't have high expenses?
But then you could go the way that Delta Song went...failing.
The airlines industry is definitely not for an initial investment as it requires a vast amount of capital to get it going.
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