Porter's Five Forces Model

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This is a business research paper that examines Porter's Five Forces Model in reference to the U.S. airline industry. Porter's model will also be used to examine competition within the airline industry. Porter's Five Forces Model indicates that a number of factors contribute to the profitability of the existing market participants in CSD industry, but that the industry is not attractive for new market entrants.

Outline of Porter's Five Forces Model

Prepare and submit a research paper within which you discuss Porter's five forces model with reference to what you know about the U.S. airline industry. What does the model tell you about the level of competition within the industry? What factors may affect the airline industry over the next 5-10 years?

The five forces model as presented by Michael Porter in the 1980's helps a company decide a particular market or industry's attractiveness. Porter's Five Forces Model is based on the following five factors:

1. Threat of Entry
2. Intensity of Rivalry
3. Substitutes
4. Bargaining Power of Suppliers
5. Bargaining Power of Buyers

One of Porter's five forces is the threat of entry. Some things that would change the threat of entry would be the place in the life cycle the product or industry is in, how saturated the market is with competitors, the cost of entry and how embedded the current competitors are in the market. Another force that Porter stressed the need to look into was the intensity of the rivalry of competitors already in the market. The intensity of the rivalry has a strong effect on the market and how competitive the market is going to be. Sometimes a smaller competitor can come in and take up a piece of the market if the existing companies are heavily fighting amongst one another. The next part of Porter's model is threat of substitutes. Substitutes is self-explanatory, what other things can be used in place of the product that is being produced. Sometimes there can be many substitutes; while in other markets there can be few substitutes. The next force Porter discusses is bargaining power of suppliers. This is a key force because it threatens the price of the product or service offered directly, which affects profits. If the supplies being used by a company are common and easy to find the suppliers will have weak to moderate influence. The last force Porter discusses is the bargaining power of buyers. For the most part buyer does not mean the end-user. The buyer generally means the retailer or middleman who will then sell the product to a consumer. The buyer's power depends mainly on how many other companies offer a certain product or service. The more competition the more power the buyer has.

Sample of Porter's Five Forces Model Paper

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