porters 5 [ryanair]

1Porters 5 ForcesThreat of new entrantsSupporting Case ExplanationThreat LevelScale and Experience- In order for one to enter the budget airline industry, one will need to have a high capital in order to generate high economies of scale. When barrier of entry is high, threat is lowLAccess to supply & distribution channels- Access to distribution channels is required. New entrants can easily nd manufacturer via online searchHExpected retaliation- With the e!istence of other competitors such as "yanair, #asy$et % Aer &ingus, new entrant can e!pect a strong price retaliation from its competitorHLegislation & government action- 'overnment ta!es and airport charges that have been implemented will require new entrants to oblige to itLDiferentiation- &ow di(erentiation as low cost % no frills are the main focusLn summary! the threat o" ne# entry by ne# players is lo#$ %e# player #ill need to be experienced and able to reach to a certain amount o" economies o" scale in order to compete in the industry$Large investment needed "or airplanes and expertists$ Strong retaliation by existing players are high and this #ill prevent ne# players to &oin in the budget airline industry$)Porters 5 ForcesThreat of new substitutesSupporting Case ExplanationThreat Level'rice 'er"ormance (atio- With the e!istence of sea transports and car rental rms which are more e!pensive, it ta*es longer time to travel. "ailway services such as may be a cheaper option as compared to the rest but it will ta*e longer time to travel. +ence, the barrier of substitute is high. ,p-1./LExtra ndustry Efects- 0ther means of transports other than by air are sea, train and car will post a threat for short trips. +owever, if distance is further, 1ights will be preferable as travelling in other transport will ta*e longer time to travel. LThreat level "or substitutes is lo#$ Though traveling by train services is a cheaper option! it #ill ta)e a longer time to travel as compared to budget airlines$ The availability o" other mode o" transports #ill also be costly and time consuming! hence this concludes that (yanair have a lo# threat o" substitutes$2Porters 5 ForcesPower of buyersBuyers Cat: Leisure travelersSupporting Case ExplanationThreat LevelConcentration o" buyers- 3uyers power is low as buyer have limited choices of budget airlines in the industryLS#itching cost- No additional e!penses are required to switch to another airline. 3uyers are free to choose.- 4witch can be done immediately without any comple! steps,H*uyer competition threat- 3uyer has no capability to own a plane5 provide themselves.LAs the number o" budget airlines is lo#! buyer #ill have "e#er choices to choose "rom$ Hence! threat level o" buyer is lo#$6Porters 5 ForcesPower of suppliersSuppliers Cat: Airplane ManufacturerSupporting Case ExplanationThreat LevelConcentration o" Suppliers- As there are only three manufacturers in the industry ,3oeing, 708A7 and Airbus/, bargaining power of supplier is high. +S#itching cost- 4witching cost is high as airline will need to train the pilots on the new aircrafts and hence high capital investment is madeHSupplier competition threat- Aircraft manufacturers are unli*ely to go into the budget airline industry. 7ustomers will still buy tic*ets directly from "yanair websitesL,ith the limited number o" manu"acturers and airlines! the threat level o" supplies is moderate$9Porters 5 ForcesCompetitive ivalrySupporting Case ExplanationThreat LevelCompetitor balance- :here are direct competition with other airline such as #asy$et.Hndustry gro#th rate- No economic prot over 6; years ,p-1)/ L-ixed Cost- +igh !ed cost. +ence with the saturated industry, "yanair will need to have a unique business model in order to mitigate the li*elihood of low returnsLExit barriers-