The airline industry remains one of the largest industries which is constantly growing from different perspectives.
More and more people feel the necessity to appear in another country faster. Moreover, the development of innovative technologies makes the airline industry available for different layers of the world population. For example, Southwest Airlines is an organization that provides its clients with cheap flights and high-quality services. It is important to remember that the growing market of airline transportation creates higher competition in the industry.
It is also important to remember that the competition in the industry is provided by numerous closures and acquisitions. Thus, it is important to remember that the airline industry is pressed by specific competitive forces that are going to be identified by the example of the company Southwest Airlines.
How Strong Are Competitive Forces?
Identify the specific competitive pressures associated with each of the five forces
Southwest Airlines is an example of an organization that deals with the airline industry and has a lot of different advantages which make it different. Still, not each of those advantages may be considered as competitive forces. Using the example of Southwest Airlines, we are going to identify the competitive forces which exist in the industry. Five main competitive forces may influence the industry, according to Porter (in Thompson, Strickland, and Gamble 61).
It may be strange that some of the forces influence the industry as it is not cheap to start such kind of business, still, all of those five forces are impacting. The threat of new entrants is rather high in the industry. But, Southwest Airlines has the image of a low-cost airline, and this niche is not so popular among new entrants. The power of suppliers is also a competitive force that exists in the industry, but not all companies can boast of it.
The power of buying is the force which is rather low in the industry, still, there are companies which may say for sure that this force is a center of their competitive power in the market. The availability of substitutes is a competitive force that differs in the industry with the variety of the airline location (local or international). The competitive rivalry is rather high in this industry.
Evaluate how strong the pressures comprising each of the five forces are (fierce, strong, moderate to normal, or weak)
It is impossible to consider the pressures comprising each of the five forces without a specific example. Thus, the possibility of new entrants in the industry is high and this pressure has a rather strong (it may be even said fiercely) influence on Southwest Airlines. Furthermore, the power of suppliers does not influence Southwest Airlines at all. This pressure is competitive for bigger airline companies.
The power of buyers is the competitive force that makes Southwest Airlines popular among others. The pressure in this sphere is rather strong as being a low-cost company the customers with low incomes prefer to buy services from this company. The competitive rivalry is strong as the returns are not so high in the industry, so companies are going to suffer greatly in case if economics is tough. The availability of substitutes influences the company but in a normal force. Being an international company, there are not many people who would better use the train or ship to reach the place of destination.
What Is a Competitive Power of a Resource Strength?
To understand Southwest Airplanes’ competitive power of the resource strength it is necessary to consider its place in the market. Southwest Airplanes is a low-cost airline which offers its customers low prices for the services it provides. Moreover, the company deals not only with flying, but car renting and hotel rooms booking may be ordered from the website of the company as well.
It is important to know that the company was created as the local one, but later it understood that the strategy it had chosen may lead it to the international market. The combination of low prices and complex services is a competitive resource of the company which allows it to remain in the market.
Still, the complex services offered to the clients are not rare. More and more companies understand that modern people are always in a hurry and they prefer companies which offer the services in complex. Still, the services in the combination with low prices are rare to meet. At the same time, this resource strength is not hard to copy, but not every company can risk and offer its clients low-cost flights.
Moreover, there are companies, like Boeing which operate high-cost technologies and cannot afford themselves to reduce their prices. Thus, it may be concluded that the low prices resource is not hard to copy, still, not each company may dare to do this. This is what makes Southwest Airplanes a competitive company in the market of the airline industry.
Thompson, Arthur, Strickland, A. J. and John Gamble. Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. New York: The McGraw−Hill Companies, 2010. Print.