In accordance with Michael ostiarys Five Forces Mode (1980), the competition analysis of European Airline Industry comprises:
1. Potential entrance or the bane of raw competitors entry,
2. The threat of substitutes,
3. The bargaining power of buyers,
4. The bargaining of sellers and
5. The horizontal surface of rivalry between existing competitors or monopoly.
Michael Porters five forces model is aim to identify the attractor of industry as well as determine the long stock industry profitability.
1. Potential Entrants
Potential entrance is the degree of unused entrance to an industry. It depends on the industry barriers to entry. If the potential entrance is high, it may lead to increase the degree of industry competition. The industry attractiveness therefore is less due to baseborn profitability (Tutor2u, n.d.).
in that respect are number factors of barrier to entry however the winder barriers to entry can include:
* Economics of surmount
* Production differentiation
* gravid requirements
* Customer switching costs
* Access to industry distribution channels
* organisation policies
(eNote, 2012)
a. Economic scale: European airline industry has achieved frugal scale in which it creates a barrier of entry that the new entrants have to compete on a large scale (eNote, 2012). In order to compete to the existing competitors, easyJet offered low fares by minimizing cost as much as they can. easyJets low fare schema focuses on offering airfare without meal dish out and business class seating. Moreover, easyJet also encouraged Internet gross revenue to reduce the business operation cost generated by hiring reservation agents (Kumar, N & Rogers, B 2000).
b. Production differentiation is a strategy that new entrants can challenge to compete and get into the...If you demand to get a full essay, order it on our website: Ordercustompaper.com
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