Contending Forces
The forces are as follows: Threat of entry, powerful suppliers, powerful buyers, substitute products, and competitive rivalry. It would not be an understatement to remark that the airline industry is one of the most vulnerable industries across the globe.
With hundreds of thousands of variables affecting input costs, there are hardly many reasons for airline firms to raise their costs without much hue and cry – and then too at the cost of price-loyal customers. Assuming my impression to be fairly accurate, my evaluation of the airline industry in terms of the five forces that fuel competition would be as follows: Threat of entry: Perhaps this is the most significant lone factor that makes the industry more immune to new entrants and internally competitive. Huge initial investments are required to enter the industry which keeps eligibility to only large partners or ventures of millionaires.
Powerful suppliers: The airline industry cannot survive without a potentially powerful supply chain. The suppliers in the industry, however, are overlapping and the call for continuous quality improvement and the bid for the best quotes has regulated competition on a pretty significant scale. The suppliers have grown richer and airlines have received quality parts and services in return.
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Powerful buyers: A large portion of the buyer market is price-loyal. Although I may be partially wrong, but the fact remains that most airline companies offer low-cost traveling solutions seeking to tap in the large substitute products, and competitive rivalry. A small portion of the buyers are loyal to the firm and would be willing to pay premium prices for the service – and these are also loyal only to a certain extent. The price wars have literally made traveling affordable for the middle class today and are the source of intense competition in the industry.
Substitute products: Airlines offer much or less the same service. There are a few perks here and there but strictly speaking only a few airlines have been able to differentiate themselves too much from the standards. This has never let any airline to settle down with its share of the pie of airline travelers because competitors have always tried to snatch customers by giving a discount here and there. The similar and substitutable nature of the service keeps competition intensity going on.
Competitive rivalry: Like the great hero-villain story, airlines are always on the lookout for each other. There are a lot of joint ventures here and there but the bottom line is that airlines are always competing with their rivals and trying to overhaul them in whatever way possible.Which Industries operate almost devoid of global competition? Which inherent immunities do they enjoy? There are very few industries that operate without the threat of global competition.
It would be wrong to suggest that these industries are 0% competitive in the global market but rather it can be understood that these industries face very little global competition and thus continue without much evolvement and continuous improvement. One such industry could be the health industry. Since the aim of clinics, hospitals and homes is to ensure public safety, counseling and the administration of proper health and medical services to the persons requiring them, the focus of this industry is least towards competition.
Thus, it enjoys being a non-global competitive industry with few avenues to hit the track with its competitors. They enjoy the immunity of competition from other hospitals in terms of attracting doctors, patients and suppliers. Hospitals and health centers are generally selected by patients on the basis of convenience and/or proximity. It can also involve acquaintance of a doctor in particular, however, competition in terms of price is devoid allowing global competitive immunity.
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