Thursday, April 25, 2019

Evaluation of the United States Airline Industry Using Porter's Five Essay

rating of the United States Airline Industry Using Porters Five Forces Theory - Essay ExampleThe five forces that devise manufacturing competition include rivalry among existing competitors, threat of new entrants, threat of substitute products or services, bargaining power of buyers, and bargaining power of suppliers (Porter, 2004). These forces form the microenvironment, in contrast with the more general archetype of macro-environment. They constitute the forces impacting a company, thereby influencing its capability to serve its customers and to ensure profits. The company has to re-assess the marketplace if there is diversity in any of the forces (Aruvians Rsearch, 2011). The Airlines Deregulation Act of 1978 resulted in several years of show cadence profitability in the industry, with lowered airline fares and the entry of several new firms into the market. The financial impact on both established and new airlines was enormous (Desai, Patel & Quach, 2004, p.2). The conseq uences of deregulation on the airline industry can be understood by studying Porters Five Forces and the influence of complements to the industry. Thesis Statement The innovation of this paper is to examine the United States Airline Industry, and to determine whether it is an attractive industry, based on Porters Five Forces model. ... The United States Airline Industry has grown significantly since the end of World War II. In 1945, the leading airlines flew 3.3 billion revenue passenger miles (RPMs). By the mid-1970s, with the development of deregulation, the chief carriers of the industry flew130 billion RPMs. By 1988, following a decade of deregulation, the number of domestic revenue passenger miles had inreased ten-fold (Aruvians Rsearch, 2011). This is reiterated by Desai et al (2004) who state that in the period 1965-1978 the federal government regulated the airline industry by means of enforcing artificial wage increases and artificial price levels. Further, from 1980 to 19 90 the number of passengers traveling by air increase by approximately 72% (Desai et al, 2004, p.2). The rapid growth of the United States Airline Industry before 1990 has declined withal air travel continues to be the preferred mode of transportation for most Americans because of its cost effectiveness and time saving features. Contrasting with the significant growth of the previous decade, during the 1990-1998 period the United States airline industry go through only 36% growth. Additionally, during the post-deregulation era, labour negotiations fuelled several labour strikes. The big airlines have tried to reduce costs, scarcely have been hindered by strong oppostion from labour unions. For example, Unions have battled against interventions attempting to shift unprofitable routes to lesser cost regional jets with lower paid pilots. The large airlines have been caught in traditional fare wars that adversely impact their already poor profit margins, because of facing cut-throat competition especially from low-cost rival airlines. The domestic airline industry in

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