The first thing the airline must do is look at the firm supply. If they are to continue the flights from those two hubs then they must determine if at some point in the long run the firm must be profitable or should exit the market. (Brickley et al., 2009, p. 181) Since I would assume that the costs of that route would be quite high it would appear that it would be extremely difficult for them to make a profit especially since there are lower cost airlines that customers could do business with. A competitive firm should produce
EasyJet- Case Study 1 Q1. Analyse the structure of the industry in which easyJet competes. How attractive was the industry in the late 1990s? The core objective of easyJet was to establish a sustainable mode of air travel at a price that would be comparatively cheaper to its rivals. By using a framework by (Porter 1980) we can illustrate the compatibility of such a strategy in the existing aviation industry Potential Entrants Despite the high volume of new entrants during the period of easyjet’s inception, only a minority were actually able to survive.
Another threat of substitute could be companies hiring in house people to save costs, in which case they will have to compete with them in terms of attracting talent as well. Freelancers seem to be another plausible substitute outside the industry. This shows that there’s a high threat for substitutes. Bargaining Power of Buyers: In this industry, some buyers are buying in volumes that are large compared to the vendor. (“Huge tended to
JetBlue Airways: 5 forces and VRIO Porter 5 forces Analysis for JetBlue Airways: Threat of New Entrants: Moderate Deregulated industry. Threat of new entrants higher during downturns in industry (e.g. JetBlue’s entry point). Existing airlines may encroach on an opponent’s major or regional market-share. High cost of entry into industry Potential Competitors: Low - Rivalry among existing firms is intense, which affect the profits to be low.
The order of competitive forces from strongest to weakest in Porter’s five forces model are as follows: Potential Entrants – Substitutes- Industry Rivalry- Buyers- and Suppliers. I believe that potential new entrants help liquidate the pay day market which might drive demand down in individual stores (the entries to barrier are extremely low 135k for startup), followed by substitutes such as credit cards offered by Providence (which were marketed towards unbanked costumers), current industry rivalry also proved to be a competition force that affected individual pay day locations (similar reason to new entrants). 3. What are the driving forces that are currently affecting the payday lending industry? The driving forces that are currently affecting the payday lending industry are entry or exit of major firms, regulatory influences and government policy changes, marketing innovation, and lastly changing societal concerns and attitudes.
These methods have increased because it helps the business to reduce their expenses and watch their budget more carefully. This links in again with following trends of technological advances. Business travellers will look for budget airline alternatives, and may fly economy instead of business. Because of this, there are more flight and accomondation providers in competition to give their customers the lowest price possible so as they get value for their money. Businesses such as EasyJet and Ryanair have benefit from this.
WestJet’s competitive priority relates to cost, quality and delivery. Cost – WestJet has been able to reduce its operating costs through standardization. By purchasing only one type of plane WestJet is able lower both maintenance and training costs, resulting in higher profits. These savings and profits allows WestJet to provide lower cost airfares to its customers, thereby having a competitive advantage over its competitors. Quality – WestJet’s culture emphasizes a fun and friendly atmosphere for all travellers and empowers employees with bottom-up management.
This would increase the costs and result in the firms passing on the costs to the consumers, this would increase the prices of the goods causing negative externalities and discourage them from being bought. If there is an over production in the goods due to negative externalities, it means (s) has shifted to (s1). Which results in too many goods being supplied out to the public. The prices are also very low which makes it easier for them to buy goods, especially those with lower income. At the point the social cost [s1] is not taken into account only the private cost is.
American Airlines’ Actions Raise Predatory Pricing Concerns Introduction As companies continually search for ways to rise above their competition, various strategies are attempted in order to excel and end up on top. One such strategy, and the topic of this case study, is that of predatory pricing. This derogatory term refers to the practice of selling products or services below cost in an attempt to force competitors out of the market by underselling them to a means where they can no longer compete (Institute of Competition Law, October 2012). The practice is referred to as predatory pricing because the ultimate goal is to eliminate the competition; even as the practicing organization provides its product at a point that is not financially sound due to being below cost. American Airlines was accused of predatory pricing business practices during 1995-1997 when competing against several low cost carriers in the Dallas, Fort Worth area, forcing the other airlines out of the market.
And the costs of complying and some additional costs such as audit fees can be very high, especially for small firms. Furthermore, if the IPO fails JetBlue will lose money. This makes the IPO process time consuming and expensive. Finally, the future benefits of being listed are not guaranteed. After weighting the costs and benefits of going public, in my opinion, private placement would be a better idea for JetBlue to raise funds particularly following the terrorist attacks of September 2001, because private placement is less expensive, less time consuming and do not need for registration, and at the same time, JetBlue can also raise funds quickly through private placement.