The UK airlines industry has over the last few years become such a competitive battleground that only those carriers consolidating stand a chance of competing. This is why mergers and acquisitions have become the norm as evidenced by British Airways merging with IAG, parent company of Aer Lingus, Iberia, Level and Vueling, and Virgin Atlantic merging with Delta. IAG is already eyeing up Norwegian. In an increasingly cut-throat and low-margin air travel industry, the collapse of Monarch in 2017 as well as BA's decision to shut down its ten-year-old subsidiary, Open Skies, is a reminder of how competitive the industry has become. While the industry is still attractive as evidenced by success of Norwegian, the high degree of competition means that it is likely to see more collapses, mergers or acquisions. This report looks at how the five forces of competition buyer power, supplier power, threat of substitutes, threat of entry and rivalry between existing firms are shaping the UK airlines industry and BA.
Magezi, K. Prudence (2018) "British Airways Porters Five Forces 2018" 123 Writing [Online] at https://www.123writing.com/free-sample/british-airways-porters-five-forces-2018
British Airways Strategy Case Study
Key Learning Outcomes
- Use Porters five forces model to analyse an industry on the basis of the five competitive forces.
- Analyse the UK airline industry industry and how the five forces have affected British Airways and rival firms like EasyJet, Norwegian Air, Ryanair etc. and the impact on industry structure, attractiveness, and profitability.
- Understand how British Airways defends against intense competition from EasyJet, Ryanair and Norwegian Air and the strategies it uses to create 'blue oceans' that are defensible, helping it capture market share and maintain competitive advantage.
Porters Five Forces is a popular business framework organizations used in assessing the attractiveness of an industry or sector as exerted on by the five forces. The five forces include threat of entry, threat of substitutes, power of buyers, power of suppliers and competitive rivalry among existing firms. According to Johnson et al (2008), if the five forces are very high, then the industry or sector will not be good to compete in as it will mean too much pressure and competition to allow reasonable profits.
This report undertakes a competitive analysis of the UK airlines industry using Porters five forces, assessing the impact of the five forces on industry structure, attractiveness and profitability.The report will in particular examine the bargaining power of British Airways buyers and suppliers; the rivalry within the industry as the company tussles with low cost airlines such as EasyJet and Ryanair for market share, threat of entry/barriers to entry and threat of substitutes.
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