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Forces
| Impact
| Details
|
Bargaining
power of suppliers | High | Suppliers provide fuel and oil for
aircraft. Airlines do not have enough power to reduce oil and fuel prices by
bargaining power. Thus the bargaining power of suppliers is high. |
Bargaining
power of buyers | Moderate | Bargaining power of buyers is
decreased because of the online booking system. However, the availability of
alternative services increases bargaining power for the overall airline
industry. |
Threats
of New Entrant | Low | Industry requires huge investment and
good reputation thus entry is not easy. |
Threats
of Substitute | Moderate | There are other substitutes such as
train journey and bus services. However, for international travelling
aeroplane is the best option. |
Rivalry
| Moderate | Competitiveness is high however the
airline industry is not dominated by some specific airlines only. |
Limitations of porter’s 5 forces model are enlisted below:
Porter’s 5 forces
model provide limited information about internal factors as it mainly relies
upon external environmental factors for an organization.
Porter's 5 forces
model fails to provide information about some external environmental factors
which can draw an impact on business such as political and technological
factors.
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