Emirates Airlines Porters Five Forces Analysis Essay

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Porter’s Five Forces Analysis

Porter’s five forces model is a tool that is utilized to analyze the competitive environment within which an organization or a product operates. There are five particular forces including the threat of entry, the bargaining power of suppliers, the bargaining power of buyers, threat of substitutes and rivalry amongst existing competitors. The threat of new entry delineates how simple it is for a new entity to enter into the airline industry. The higher the threat of market entry, the worse it is for existing rivaling organizations in the industry. The threat of substitutes encompasses the magnitude of existing products or services that offer similar benefits to the products or services. With regard to the bargaining power of buyers, if the buyers have significant power they can demand cheaper prices or opt for other products, which can hamper the profits generated. Bargaining power of suppliers implies the ability of suppliers to shift to different consumers, being the sole producers and dominating. Competitive rivalry takes into account the rival organizations within the similar industry that have the same products and services (Porter, 1980).

The competitive forces shape every particular industry and market. They are also determining factors of the level of intensity of the competition and therefore the profitability and also the attractiveness of an industry. By contemplating on the manner in which each of these forces impacts the business, and by ascertaining its strong suits and direction, it is possible for Emirates Airlines to assess its market position. Thereafter, it is possible for the firm to look at the different strategic changes that it needs to make in order to deliver longstanding profit. The fundamental objective of such strategy ought to be to undertake modifications in a manner that enhances the position of the firm (David and David, 2003). Emirates Airlines should make use of the model in order to have a clear perception of these forces, either within the airline industry or external to the industry, which impacts their strategies and the organization as a whole, to determine how to have a competitive advantage. Every industry is distinctive and has its own unique structure. Therefore, Emirates Airlines can capitalize on the Porters Five Forces model to determine the different ways of satisfying consumers so as to attain an effective competitive edge over market rivals. This is fundamental to ensure that the company generates profits (David and David, 2003).

FORCE 1 – THREAT OF NEW ENTRY – LOW

The threat of new entrants to the marketplace signifies a low threat for Emirates Airlines. First of all, the barrier of entry into the airline industry is significantly high. The operating costs incurred within the industry are massive and new firms are bound to face some challenges. However, it is imperative to note that the Middle East is a region has a number of good finance sources. This implies that it is possible to provide the funding necessitated for business start-up and operation. Secondly, the rules and regulations in place are flexible for new market entrants. However, Emirates Airlines are provided with support from the government and therefore this makes it harder for new market entrants to compete (Rahman et al., 2015). Third, bearing in mind that the airline industry necessitates incessantly keeping up with the advancement in technology and the level of specialty it has assimilated into the operating strategies, there is a significant challenge into market entry. The threat of market entry is also low owing to the reason that the industry is already saturated and operation within the industry is significantly high. It is imperative to note that at the moment, there are numerous different airlines with recognized brands.

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This implies that new airlines would find it hard to compete effectively. For instance, in the present day, low-cost airlines have started entering the market. However, dominant airlines such as Emirates Airlines continue to enjoy a huge number of consumers owing to their renowned brand and also the exceptional services provided. Therefore, the new market entrants do not substantially hamper the profits generated (Rahman et al., 2015).

There is no way that prevailing businesses can preclude new entrants from attempting to get a share of the market. However, there are numerous strategies that can aid them to sustain their position in the marketplace or ensure that they are ahead of the rivals. There are various recommended strategies that Emirates Airlines can utilize to improve competitive advantage and its market position. First, Emirates should improve on existing products or services. For instance, the airlines can focus on offering consumers with affordable tickets, flights with full services and exceptional customer service. A second strategy is to lay emphasis on the needs of the consumers. The company should make the customer experience fundamental to the different products and services assimilating various aspects to comprehend consumer perspectives and prospects (Porter, 2008).

FORCE 2 – BARGAINING POWER OF SUPPLIERS - HIGH

The supplier’s bargaining power delineates the relative power that powers are able to portray in the market environment to impact the level of success and performances of companies. The constituents of the suppliers’ bargaining power are in relation to the raw materials and the energy sources. The major suppliers in the airline industry are Boeing and Airbus. There is intense competition between these two leading suppliers. These suppliers have significantly high bargaining power owing to the reason that they might opt not to work with the organization in the course of economic mayhem or also announce excessive prices for these resources (Rahman, Azad, and Mostari, 2015). Emirates Airlines has a strong incentive to maintain a good and healthy relationship with its suppliers because finding a new consistent and reliant supplier can be a significant challenge. In contrast, the supplier can easily find other buyers that are capable of achieving the similar sales volumes signified by Delta. In this regard, the bargaining power of suppliers is high (DePersio, 2018).

There are different strategies that Emirates Airlines can undertake to maintain a competitive advantage and strong position in the market. One of them is to realize that supplier strategies go in two different ways. Majority of the corporations lay emphasis on what the suppliers can do for them instead of what they can accomplish with the supplier to diminish costs. Therefore, Emirates should strive to attain a partnership that leverages the total production cost to the advantage of both parties. In addition, it is imperative for Emirates Airlines to plan for exceptions and also major contingencies. At times, emergencies will take place, particularly in intricate manifold supply chains. Therefore, it is imperative for Emirates to plan how emergencies will be dealt with and also partake in joint planning in order for disruptive events to be managed in a smooth manner (Blanchard, 2009).

FORCE 3 – BARGAINING POWER OF BUYERS - HIGH

Emirates Airlines are subject to high buyer bargaining power. This is driven by the fact that there are various airlines that the consumers are able to choose from. The different airlines that consumers can choose from include Turkish Airlines, Fly Dubai, and Etihad Airlines. Specifically, consumers have bargaining leverage in the sense that they can choose different….....

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References

Alshubaily, A. (2017). Exploring the Key Success Factors for Young Airlines—A Focus on Emirates Airlines and its Regional Competitors\' Strategy for Success. Saudi Journal of Business and Management Studies, 2(16).

Bhasin, H. (2018). Top Emirates Competitors. Marketing91. Retrieved from: https://www.marketing91.com/top-emirates-competitors/

Blanchard, D. (2009). 10 strategies for managing suppliers. Industry Week. Retrieved from: https://www.industryweek.com/companies-amp-executives/10-strategies-managing-suppliers

Bowhill, B. (2008). Business planning and control: integrating accounting, strategy, and people. Hoboken: John Wiley & Sons.

David, F. R., & David, F. R. (2003). Concepts & cases. New York: John Wiley and Sons.

DePersio, D. (2018). Analyzing Porter\'s Five Forces on Delta Airlines (DAL). Investopedia. Retrieved from: https://www.investopedia.com/articles/markets/012816/analyzing-porters-five-forces-delta-airlines-dal.asp

Dudley, D. (2017). Rising Competition Threatens Profits Of Middle East Airlines. Forbes. Retrieved from: https://www.forbes.com/sites/dominicdudley/2017/12/07/competition-threatens-profits-gulf-airlines/#496f684b38a1

Kim, W. C., & Mauborgne, R. A. (2014). Blue ocean strategy, expanded edition: How to create uncontested market space and make the competition irrelevant. Harvard business review Press.

Porter, M. E. (1980). Competitive strategy: techniques for analyzing industries and competitors. New York: The Free Press.

Porter, M. E. (2008). Competitive advantage: Creating and sustaining superior performance. New York: Simon and Schuster.

Rahman, K., Azad, S., & Mostari, S. A. (2015). Competitive Analysis of Airline Industry: A Case Study on Biman Bangladesh Airlines. IOSR Journal of Business and Management, 17(4): 22 -33.

The Hindu Business Line. (2011). Airlines woo customers with attractive packages. Retrieved from: https://www.thehindubusinessline.com/economy/logistics/airlines-woo-customers-with-attractive-packages/article23047894.ece

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