Case Study: Japan Airlines

1. In order to analyse the business’ competitive advantage, an appropriate model needs to be used where the different aspects of the business can be categorised and broken down into smaller sections in order to gain a more detailed view. The below analysis is based on Porter’s 5 competitive forces model along with a value chain model that shows how value is created in different stages of the product/service’s cycle, in addition to other support services of the business that complement these direct value adding stages.

The first stage of Porter’s model is the threat of new competitors to the market that the company is currently competing in. The first of the new competitors against Japan Airlines was a small domestic carrier called Air Nippon Airways. Air Nippon became a contender for overseas travel from Japan after the deregulation by the Japanese Government in the 1970’s. Previous to this JAL were the only domestic airline allowed to operate internationally after a treaty in 1951 after World War II prevented Japanese pilots and airplanes to operate international routes.

E-ticketing systems and the additional information systems that complemented it such as online reservation systems where a complete holiday could be planned and purchased/booked online created new low cost airlines that were focused on providing the customer with the lowest fare possible. This was mainly achieved through the extensive use of information technologies to integrate all the business functions together and hence saving great costs to the airline.

Another force from Porter’s model is the bargaining power of suppliers. The power that the suppliers of a company have can largely affect the performance of the business as profit margins are quite a small percentage of the overall price passed onto consumers, the majority being costs of production and supporting services. The deregulation of the airline industry in Japan in the 1970’s which has been previously mentioned is a prime...