British Airways Strategy Case Study
Key Learning Outcomes
By the end of the case, students should be able to:
- Use Porters five forces model to analyse an industry on the basis of the five competitive forces.
- Analyse the UK airline industry industry and how the five forces have affected British Airways and rival firms like EasyJet, Norwegian Air, Ryanair etc. and the impact on industry structure, attractiveness, and profitability.
- Understand how British Airways defends against intense competition from EasyJet, Ryanair and Norwegian Air and the strategies it uses to create 'blue oceans' that are defensible, helping it capture market share and maintain competitive advantage.
1.0 INTRODUCTION
Porters Five Forces is a popular business framework organizations used in assessing the attractiveness of an industry or sector as exerted on by the five forces. The five forces include threat of entry, threat of substitutes, power of buyers, power of suppliers and competitive rivalry among existing firms. According to Johnson et al (2008), if the five forces are very high, then the industry or sector will not be good to compete in as it will mean too much pressure and competition to allow reasonable profits.
This report undertakes a competitive analysis of the UK airlines industry using Porters five forces, assessing the impact of the five forces on industry structure, attractiveness and profitability.The report will in particular examine the bargaining power of British Airways buyers and suppliers; the rivalry within the industry as the company tussles with low cost airlines such as EasyJet and Ryanair for market share, threat of entry/barriers to entry and threat of substitutes.