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Economic of the Airline Industry - Essay Example
Today, the business environment has increasingly become more turbulent, chaotic and challenging than ever before and to survive, it is vital that a firm understands the strategies underpinning the success of rival firms and try to emulate, or do something better than the rivals…
Changes in investment activity, employment, and prices may be a recurring and frequent manifestation of economic development in a competitive and dynamic economy.
Kanter (1995:71) on his work of "Mastering Change" argues that success in the present day business is not for those companies that re-engineer the way they do things, or for those fixing the past. According to Kanter (1995) such an action will not constitute an adequate response. This is so because success is based on an organisation's ability to create, rather than predict the future by developing those products that will literally transform the way the world thinks and view it self and the needs (Kanter 1995:71).
This report looks at the industry environment of the airline industry, the microenvironment, and the global environment. This report draws primarily on Porter's interpretation of the literature on industrial organization economics to identify competitive forces. The central theme in the paper is that, if an airline company is to survive and prosper, its management must understand the implications that environmental forces have for strategic opportunities and threats. Focus on the paper is on the determinants of demand of air travel. The paper also looks at the nature of competition of the low airline industry.
According to Jayathi (2005), competition in the airline industry has been fierce since the industry was deregulated in 197 ...