porter five forces and value chain for airasia

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Porter’s Five Forces Model And Porter’s Value Chain for AirAsia in an Airline Industry

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Porter's Five Forces Model and Value Chain Model for AirAsia

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Page 1: Porter Five Forces and Value Chain for AirAsia

Porter’s Five Forces ModelAnd Porter’s Value Chain for AirAsia in an Airline

Industry

Page 2: Porter Five Forces and Value Chain for AirAsia

PORTER’S FIVE FORCES MODEL

Page 3: Porter Five Forces and Value Chain for AirAsia

Porter’s 5 Forces Model

Threats of New Entrants

Rivals & Competitors

Threats of Suppliers

Power of Buyers

Power of Suppliers

Page 4: Porter Five Forces and Value Chain for AirAsia

Threats of New Entrants

• Threat of new entrants is relatively LOW. Why?– Need a lot of capital, investment and funding.– Need to conduct in-depth research and

development before entering the market.– Need to spend a lot of money on marketing and

advertising.– Need to hired highly skilled technicians and

engineers.– Need to find an enormous experience workers –

pilot, cabin attendants, etc

Page 5: Porter Five Forces and Value Chain for AirAsia

Threats of Substitutes

• Threat of substitutes is LOW due to:– Performance of substitute – cars, trains, buses,

ships which is takes longer time to reach destination

Page 6: Porter Five Forces and Value Chain for AirAsia

Rivals and Competitors

• Threat of rivalry and competitors in the flight services is HIGH due to:– Higher number of rivals– Customer easily to switch the airline services – High exit cost• Once entering airline industry, hard to find company

exit the industry due to high cost in paying loans, staff retrenchment and flight cancellation refunds.

Page 7: Porter Five Forces and Value Chain for AirAsia

Power of Buyers

• Power of buyer is HIGH due to:– Services given has no significant differentiation– Switching cost for buyer is LOW– Buyer have easy access to the information about

airline services such as price, promotion

Page 8: Porter Five Forces and Value Chain for AirAsia

Power of Suppliers

• Only 2 major suppliers for aircraft industry – Boeing and Airbus – So, the power of supplier is HIGH

• Switching cost is HIGH – aircraft, training of workers

Page 9: Porter Five Forces and Value Chain for AirAsia

Porter’s Value Chain

Page 10: Porter Five Forces and Value Chain for AirAsia

Primary Activities

• Inbound Logistics• Operation• Outbound Logistics• Sales & Marketing• Services

Page 11: Porter Five Forces and Value Chain for AirAsia

Inbound Logistics

• AirAsia currently only running an Airbus planes– can save cost on training of engineering and

focusing on other thing such as promotion and innovation.

• In-Flight services such as meals get from local delights– Can promote local food at the same time!

Page 12: Porter Five Forces and Value Chain for AirAsia

Operations• 25-minute turnaround

– Less time on the ground and more time in the air means AirAsia get the most of every flight through high aircraft utilisation, lower costs and greater airline and staff productivity.

• Low cost carrier model– Self automation

• Customer can book and print the ticket and also check-in by themselves, so this can reduce cost on counter services.

– No frills • Customer only pay for flight services charge. If customer need in-flight comfort such as

meals, blanket, customer can add-on later. – Cost-saving innovations

• Constantly on the lookout for the latest advancement in savings, AirAsia are the first airline to use the new Airbus A320 aircraft installed with ‘sharklet wing tips’ to lower wind drag and provide better fuel consumption.

Page 13: Porter Five Forces and Value Chain for AirAsia

Outbound Logistics

• Customer can book their ticket and check-in their flight thru online by themselves. This make AirAsia more convenience to the customer than other flight service available in Malaysia.

• Customer can easily get AirAsia flight service in all Malaysia airport

Page 14: Porter Five Forces and Value Chain for AirAsia

Sales & Marketing

• Sponsor well known sports team• Make a lot of advertisement all over the

media – internet, newspaper, tv• Make an flight promotion periodically – twice

or more in a year

Page 15: Porter Five Forces and Value Chain for AirAsia

Services

• AirAsia offer other services such as– AirAsia Car rental, Cargo, Megastore, Foundation,

Travel Protection, etc• AirAsia also offer after-sales-services

Page 16: Porter Five Forces and Value Chain for AirAsia

Supportive Activities

• Procurement• Technology Development• Human Resource Management• Firm Infrastructure

Page 17: Porter Five Forces and Value Chain for AirAsia

Procurement

• AirAsia separate their business procurement into different unit such as flight, hotel, in-flight services, merchandise, etc, but everything are connected to the goals of AirAsia.

• Each unit can focusing more on their own business.

Page 18: Porter Five Forces and Value Chain for AirAsia

Technology Development

• AirAsia using certain system to support their company operations– Yield Management System (YMS) which takes into

account the operating cost and expected revenues.

– Computer Reservation System (CRS) as a web-base for reservation

– Enterprise Resource Planning System (ERP) to speed up reporting and data retrieval process.

Page 19: Porter Five Forces and Value Chain for AirAsia

Human Resource Management

• HR hiring multiple skill personnel to increase the quality and efficiency of the company and also will reduce the cost for company such as time and training development.

Page 20: Porter Five Forces and Value Chain for AirAsia

Firm Infrastructure

• AirAsia focus on their goal which is provides the lowest price for customer

Page 21: Porter Five Forces and Value Chain for AirAsia

END