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Poter's Five Competitive Forces

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Poter's Five Competitive Forces Powered By Docstoc
					Reservations About Its Future
             by
          Group 1
         Wei-Ru Chen
          Josh Earle
           Hong Xu
               Overview
• Background
• Porter’s Competitive Forces
• How Porter’s Forces Relate to Canadian
  Airlines
• Internal Strengths and Weaknesses
• Recommendations
                Background
•   Airline Industry and the Technology Age
•   American Airlines
•   United Airlines
•   Air Canada
•   Canadian Airlines
    Porter’s Impact of Competitive
                Forces


                                          Strategic business unit


Potential new entrants   Beginning power of buyers     Beginning power of suppliers   Threat of substitute
                                                                                      products or services
Porter’s Five Competitive Forces
              Model
• Helpful to assess the Economic and
  Competitive forces in a company’s
  industry.
Bargaining Power of suppliers
• Suppliers
  --American Airlines (AA)
  --United Airlines (UA)
Bargaining Power of suppliers
• Competitive Advantages
 --Profitable flight routes
 --Computerized Reservation Systems (CRS)
   controlled 80% of U.S. travel agents
   unfair “information monopoly”
   closely monitor and control travel agents
   display biased data
Bargaining Power of Buyers
• Buyers
 --Travel agent
 --Travel agency’s customer
  Bargaining Power of Buyers
• Competitive status
  --Travel agent
    limited power to choose CRS
    switching cost is too high
  --Travel agent’s customer
    profitable VS rural routes
  Threat of New Entrants into
    the Industry Segment

 Threat of New Entrants
 --new airline company
   capital requirements
 --existing airline company
   economies of scale
   information technology
   government regulations
  Threat of New Entrants into
    the Industry Segment

• Barriers
 --Information Technology
   huge start-up costs in developing the
    system
   high maintenance costs
 --Government Regulation
   Canada
   U.S.
       Threat of Substitute
       Products or Services
• Substitute Products or Services
  --ground transportation
  --water transportation
  --differentiate product
    service
    price
    Positioning of Traditional
      Intra-Industry Rivals
• Air Canada VS Canadian Airlines
  routes
  capital
           Question ???
• What are the internal strengths of Canadian
  Airlines?
• What are the weaknesses of Canadian
  Airlines?
      Internal strengths

• Fixing market.
    Fixing national routes.
    Fixing international routes
       Internal strengths
• Government subsidies
   The government provides subsidies for the less
  profitable routes
• Employees’ support
    Make an equity investment for keeping
  the company profitable
    Internal weaknesses
• Not enough room to grow
    Limited routes and market
• Lack of capital for paying projects
  (CRS).
    Have to pay for the use of CRS
    Internal weaknesses
• Financial crisis during the Persian Gulf
  War.
    The Financial decline during the Persian Gulf
     War
• Lack of important controls.
    Has no internal control over the IT system
    No position to make its own decisions.
        Recommendations
• Build its own IT system.
• Globalize its business
• Collaboration with various web browser
  companies (yahoo.com, excite.com, etc.)
                 Goals
 Reduce the
airline transaction
cost
 Increase end
customers and
market shares.
 Build its
electronic
communities
Where is Canadian
 Airlines Today?
The End
Questions?

				
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posted:9/6/2011
language:English
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