Case Analysis Porter's Five Forces Airasia

Apply Michael Porter’s five forces to the organization
Porter’s five forces include bargaining power of suppliers, bargaining power of customers, threat of new entrants, threat of substitute products or services, and intensity of competitive rivalry. Bargaining power of suppliers: In the airline industry, Boeing and Airbus are the most popular brands when it comes to the supply of aircraft. As a matter of fact, both companies command majority of the market share in the manufacture and supply of commercial aircrafts. This makes them have a very strong bargaining power over their customers of which AirAsia is one. A case in point is the fact that there are pending aircraft deliveries that Airbus is yet to make to AirAsia, and this might as …show more content…
There are other low fare airlines in the industry and it does not cost much for customers to switch from one airline to another. Another reason is because customers of this era have unfettered access to market information, which they can use to make decisions that will enable them easily find alternatives. All these factors contribute to making the buyers or customers have the power to patronize whomever they deem fit enough to provide them with their desired level of service. As a result of such prospects, it is safe to conclude that the bargaining power of the buyers is …show more content…
One of the reasons why this is so is because there is a high fixed cost in the industry and one of the most effective ways of covering this is to have as many parts of the market share as possible (Onwutalobi, 2006). For this reason, there will be very strong competition among the players in the industry, as they understand that the more customers they have, the better it is for them to cover their fixed costs. As a result of this, the intensity of competitive rivalry can be considered