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Strengths of Porter's five forces model
Harvard's Michael Porter five -force model with example
Harvard's Michael Porter five -force model with example
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Many elements of Delta Airlines are described in detail, within this paper. There is a breakdown of the external and internal factors, using external and internal analysis. Porter’s Five forces are used to create the external analysis, and the key factors for Delta are power of buyers, and rivalry. Delta’s competitive advantages are identified as customer service, sustainability, brand image, strong strategic alliances, and corporate travel. Delta’s main issues are the low expansion in international markets, continuous changing of incentive program, and glitches within technology. Delta should expand more into the Chinese and African markets in order to gain market share within the airline industry. 1. INTRODUCTION Flying across the globe can be a scary journey, but with Delta consumer feel the inviting, caring, and great quality that Delta stands for. When a customer enters onto a Delta plane the customer can start to feel the inviting atmosphere almost immediately. The customer sits down in the seat personally selected by the customer, as soon as the plane is in the air, beverages and snacks are being dispersed amongst the cabin. Delta Airlines has flights to over 326 destinations in 59 …show more content…
countries, on 6 continents (Stats & Facts). Within the airline industry there is massive amounts of competition, Prahalad & Hamel (1989) touched on the fact that the more competitors in an industry are considered major threats because of the competitors ability to erode margin and market share. Delta’s main problem consists with the low presence and growth within the international market. 2. EXTERNAL ANALYSIS a. Porter’s Five Forces and Industry Analysis A strategist’s job is to have the ability to cope with competition (Porter, 2008).
Porter’s Five Forces Model is a widely used tool by strategists to develop a competitive analysis, from which they will be able to develop strategies (David, 2013). When looking at Delta, it would be beneficial to look at the external forces this will help top management develop strategies to combat external factors, threats from external factors could potentially harm Delta. According to Porter, the nature of competitiveness in a given industry can be viewed as a composite of five forces: 1) Rivalry among competing firms, 2) Potential development of new competitors, 3) Potential development of substitute products, 4) Bargaining power of suppliers, 5) Bargaining power of
consumers.
Delta Airlines has been a vibrant company in the airline industry, with great success over the years. Delta airlines started as a crops dusting company to serving more than 572 destinations, in 65 countries on six continents (Allan, H., David. H. ,2012). Delta airline moved its headquarters from Monroe, Louisiana to the city of Atlanta, Georgia. The great management strategies have portrayed from time to time to be fruitful even in the verge of a recession. With these consistency in delivery of services, it is clear that the company is out to outdo its competitors and turn out to be the greatest airline in the world.
Southwest Airlines has come from an underdog to being one of the best airlines in the industry. This reputation translates from its strategic management of resources. The Co-founder and former CEO, Herb Kelleher, established a unique corporate culture that leads to high customer satisfaction, employees’ morale, and one of the most profitable airlines in the industry (Jackson et al., 2012). The corporate culture concentrates on empowerment the workforce. It shows through Southwest Airlines core values that “happy employees lead to happy customers, which create happy shareholders” (Jackson et al., 2012). Since its first grand opening in 1971, Southwest Airlines has shown steady growth, and now carries more passengers than any other low-cost carrier in the world (Wharton, 2010). To expand the business operations, Southwest Airlines took over AirTran in 2010 as a strategy to gain more market share for the Southeast region and international flights. However, the acquisition of AirTran brought upcoming challenges both internally and externally for Southwest Airlines. In this case analysis, the objectives are focusing on the change process post the merger with AirTran, and evaluating alternatives to address the impacts of the merger.
Delta does business globally in 503 cities in 94 countries and is the third largest airline in the United States. In 2003, Delta's daily needs included 7.3 million gallons of fuel, 109,000 meals and snacks, 151,000 bottles of water, 87,000 cans of soda, and 219,000 pounds of ice. Its daily operations also required large amounts of information relating to such areas as flight schedules, gate information, baggage handling, customer service, and tower operation. To be competitive in the airline industry, Delta required an efficient flow of operations. However, accurate advanced planning is nearly impossible because of such elements as changing economic realities and weather conditions, and unexpected maintenance issues.
Southwest Airlines Company (SAC) has turn out to be a shining example not only in the airline industry, but in the business world as a whole. At the heart of the carrier, their vision and mission statements have been diligently working to turn a dream into reality by becoming the world’s most loved, most flown, and most profitable airline, as well as be dedicated to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit, respectfully (Investor Relations, 2015). As a Fortune 500 company, SAC employs over 49,000 personnel to provide first-rate service more than 100 million customers annually. They credit much of their success to its triple bottom line approach
Even though Southwest offers no-frills, there is still a high degree of customer satisfaction that continuously builds customer loyalty for the company. As mentioned, Southwest offers low prices on their airplane tickets. Also, Southwest is renowned in the airline industry for its short turnaround time on arrivals and departures. And since people's biggest concern nowadays is money and time, having low price airline tickets to cater their traveling needs in a shorter period of time will surely satisfy them. Moreover, aside from the low prices offered, what attracts to customers is Southwest’s way in dealing with them. The employees of the airline treat their customers well and really listen to their needs.
The 5-Force Industry Analysis first introduced by Michel Porter, Harvard Business School professor, a quarter-century ago. This theory examines the suppliers, buyers, product substitutes, existing firms’ rivalry and new entrants in a firm’s product market.
Delta Air Lines is one of the many airlines in this industry that is trying to make profit in this competitive industry. A slow recovery from bankruptcy forced many of the U.S carries to join with other airlines in order to continue in this business. Like many airlines in this industry Delta Air Lines has been operating off a hub and spoke system. Having to place different hubs all over the country allows the company to efficiently provide scheduled air transportation for its passengers and cargo throughout the states and the world. Delta’s global route network and strategically placed hubs in different parts of the world allows them to make profit domestically and internationally. The company’s network is centered on a system
When analyzing Delta, you do not have to search very far before quite possibly one its strongest attribute rears its head. Based on calendar 2000 data, Delta is the largest U.S. airline in terms of aircraft departures and passengers enplaned, and third largest as measured by operating revenues and revenue passenger miles flown. Delta is the leading U.S. airline in the transatlantic, offering the most daily flight departures, serving the largest number of nonstop markets and carrying more passengers than any other U.S. airline. Delta Air Lines transports more passengers worldwide than any other airline. Through a vast worldwide route system Delta has flown over 117 million passengers, more than any other airline in the world. Delta mainline, domestic and international service, Delta Express, Delta Shuttle, Delta Connection®, Delta Sky Team and Worldwide Partners operate 6,400 flights each day to over 450 cities in 98 countries.
Southwest has done what others in its industry seem to struggle to do, which is to make flying fun. This has been the cornerstone for how the Southwest operates, thinks, and plans. Many of the policies, procedures, and practices Southwest has used are aimed directly at providing patrons with a unique, fun, and enjoyable experience. This value and the effort Southwest has made to place customers at the forefront of its plans and strategy, has paid off as the company is one of the most popular and well-respected in the transportation industry.
As an airline corporation serving most of the United States and several international locations, JetBlue burst into the scene and grabbed significant market share. However, with growing reputation came stiff competition from major airlines as the rival brands felt a significant threat. It forced JetBlue to re-think a lot of its business model, from fuel-economy of its carriers to marketing strategy. Nonetheless, a decade-and-a-half since its debut, it holds strong in the highly competitive and fragmented air travel industry, particularly impressive with its customer satisfaction rating.
Southwest Airline’s ability to diversify, while limited, is still an option. When Southwest airlines first made its mark in the industry, it was a local carrier flying between Dallas, Houston and San Antonio. Today, Southwest fly’s internationally and is continually adding additional countries to its destination list. The introduction of its Amadeus Altéa reservations system is set to operate both the domestic and international bookings. The same competencies that helped establish Southwest Airlines in 1973, are being implemented today with its diversification and growth
Delta offers services to a very diverse range of people. It serves business travelers to consumers who enjoy leisure flights. It’s very family friendly and ranges from all ages of people onboard. Delta flies 170 passengers a year; 82 million passengers have SkyMiles memberships. 82% of Deltas customers are between the ages 25-44. 71% are married and 32% have children. Statistically speaking over 60% of its customers graduated from college with average household incomes of over $100,000 ("Delta Sky Media," 2015).
When an airline does not have a sustainable competitive advantage, it does not have any properties of differences from there competitor and turns to a dangerous price war. The sustainable ...
Porter’s five forces is a framework for analyzing an industry and business strategy development. It looks at forces that determine the competitive intensity of an industry and hence the overall attractiveness of that industry. The configuration of the five forces differs by industry. Understanding the competitive forces and their underlying causes reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition over time.
Airlines are still a very important part of our world's economy. In fact, the world would not function without them. People from every country use airplanes. An airline company has to be able to handle different cultures, ethnic groups, and financial groups. They also need to be able to handle the growth of passengers for the coming years. Mike Beirne says that U.S. Department of Transportation statistics suggest that international passenger traffic may actually increase. (Brandweek 1999) When you look at all of these factors, you can see that the coming years are going to be a role coaster for the airline industry. The airlines company that suite the majority of these people will get the bulk of the business. Because of this there are going to be many changes in the airline industry. The airline business is going to have a marketing frenzy. We can expect every company to make changes to their current planes. The reason that they are going to make changes is that they will want more of the business. If a company does not change, they will be left behind and eventually be put out of business. In this paper, I will show you different marketing techniques that will win over travelers.