Porter's Five Forces

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STRATEGIC PRACTICE EXERCISE Question One: Evaluate each of the forces currently driving competition in the Canadian Airline Industry. Score each competitive force and provide a brief rationale for your assessment. The threat of new entrants within the industry is a MEDIUM competitive force. The airline industry in Canada is already a competitive market where airline companies are fighting for consumer loyalty and reoccurring business. With a strong Canadian economy and a higher influx of business travelers, particularly from the US, flight demands will continue to rise. The business expansions from the US into the Canadian market place (retail and finance at the forefront) make it particularly attractive for frequent business travel with such close geographic proximity. These factors combined with lower governmental regulations then other places in the world make it attractive for new entrants to take the risk of launching into the pool. If a new entrant is able to break into the market offering lower rates then it could pose a significant threat to an already competitive pool. Porter airlines can be an example of how a niche small airline can come into a competitive market and steal market share from a dominant national like Air Canada. The strategic launch of the island carrier that offered more convenience for the business traveller and cheaper rates for the consumer provided a strong business growth model to gain market share. Departing from the downtown Toronto core, Porter offers popular routes within Canada and to the US. Air Canada has an entry barrier in this market considering the airport size and noise restrictions implemented by the government along with petitions from communities that are voting the ban of turbine jet use from the island airport (which is the larger part of Air Canada’s fleet). In the case Government policy has supported

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