Porter's Five Forces Industry Analysis
4.0 INDUSTY ANALYSIS
4.1 Introduction
The aviation industry, primarily in Malaysia would be analysed based on Michael Porter’s Five Forces combined with another analytical tool; PESTEL model. The objectives of using Porter’s Five Forces model are; To identify the behavioural factors of the competition, To manage long-term business attractiveness in the industry, to analyse and access industry attractiveness that have been structured and lastly to explain relationship between the five dynamic forces and the business performance. Five fundamental of Porter’s competitive forces are; The entry of competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers and the rivalry among the existing players in
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To add further, there are few oil companies that could be bidding the contracts of supplying airplane’s fuel at the very first place. Other than that, in terms of catering contract, a long-term of 25 years contract signed between MAS and Brahim’s Holdings Berhad is viewed as a constant threat for MAS. This is due to the fact that the bargaining power of suppliers is very high and Brahim’s could be manipulating MAS- if they want to, by making the price of its service skyrocketed to a ridiculous …show more content…
Among those reasons include the emergence of Low-Cost Carriers (LCCs), and changes in regulations in terms of safety after the incidents of 9/11 and of course; both MH370 and MH17 tragedies. Safety now is the most prioritised element in the aviation business which this certainly leads to more expensive operating expenses. The number of competitors is increasing over years but at a small number in the long-run. The fixed costs are extremely high for airlines operators which this would make the decision of leaving the industry would not be an option for anybody. Airline operators are tied with long-term agreements in order to stay and sustain their business. The involvement of highly-sophisticated machineries, for this case the aircrafts would add more flavours in the competitions; making it harder and more competitive than
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