Organizational Competitive Strategies-Porter's Five Forces Model (Air Asia)

The Porter’s five forces model, in this assignment, can be used to access the competitiveness of the airlines industry. It can review the competition within the industry plus checks for threat from outside.

Bargaining power of supplier-High- In every industry, there has to be someone to play the role of a supplier. It is important to know the power of the supplier as it will affect the industry. There are only two main suppliers in the airline industry, Airbus and Boeing, thus there isn’t much of an open option. Not forgetting the global economic catastrophe which has limited the new entry of competitor plus reducing the necessity of upgrading of planes in near future. However, both suppliers grant almost similar standard aircrafts; hence the switch to AirAsia is low. Furthermore, AirAsia places a bulky amount of order from Airbus in order to expand its routes internationally. Therefore, the authority of suppliers may weaken as Airbus’s profit may be influenced by Air Asia.

Bargaining power of customer-High- Customers are the main factor which influences the industry to either make a loss or profit. Nowadays, customers are much more knowledgeable and comparative compared to previous. Thus, they are very sensitive to the hike and drop of prices, regardless the product or service. In this assignment, AirAsia always provides the lowest price to customers, but the act of comparing between airlines still exist. AirAsia is not the only one providing an airline service thus, for a customer to switch between airline services is simple. For example, customer may still choose MAS, Tiger Airway or even Firefly.

Internal rivalry within the industry-High- In every business sector, there exist either a positive or negative tendency towards an industries rate of development. Result of a positive trend would be in companies not stealing the share market among them. Nonetheless in an airline industry, the rate of development is low by reason of the inadequate amount of...