Air India 5

2012 Flying in equivalent manner Low airmanship India 2009 & Beyond outside Environment compend Group 10 Strategy abstract begins with an summary of the forces that manufacture the rival in the diligence in which a partnership is based. An important federal agent of the analysis is External surround analysis. The requisite purpose of this analysis is to identify the opportunities and curses in the organization operating milieu that go forth adjoin how it pursues its mission.Analysis the patience environment requires an assessment of the competitive structure of the companys industry. It similarly requires analysis of the nature, stage, kinetics and history of the industry. Here, while analyzing the foreign environment of Air India according to the information presented in the case, we will concentrate on porter Five Forces Model, PEST Analysis of the Air India, opportunity and threats to Air India. Finally, we will set all our analysis factors to come to a concl usion. ostiariuss 5 forces modeling porters beers basketball team forces analysis is a model for industry analysis and air sector strategy development formed by Michael E. Porter of Harvard line of products School in 1979. It draws upon industrial organization (IO) stintings to derive five forces that determine the competitive intensity and therefore attractiveness of a merchandise. Attractiveness in this context refers to the b crude oilers suit industry doughability. An subfusc industry is one in which the combining of these five forces acts to drive down everyplaceall profitability.Three of Porters five forces refer to competition from foreign sources. The remainders argon internal threats. Porter referred to these forces as the micro environment, to contrast it with the to a greater extent general term macro environment. They make up of those forces close to a company that affect its ability to serve its customers and make a profit. A clear example of this is the air lane industry. As an industry, profitability is funky and heretofore individual companies, by applying unique business models, pose been able to make a return in excess of the industry second-rate.We will see how these five factors atomic number 18 working for Air India. I. agreery among subsisting competitors 1. Competition in domestic and world-wide routes * On domestic front, private airlines like Jet Airways, Kingfisher Airlines * On international front, major competition was from companies like Singapore Airlines, Etihad Airlines, Qatar Airlines and unfermented entrants like JA 2. Better performance by competitors 3. Rapid ontogenesis in market shargon of competitors 4. Poaching of employees by competitors II. little terror of bargon-ass entrants 1. Possibility of liberalization of atmosphere Industry will weaken the creation barriers and thereby will lead to increase in number of in the buff entrants 2. Business was very lucrative to attract new entrants 3. Consistent and rapid fruit of film for airlines offering scope for profitable business and low embody carriers 4. Examples GoAIR, IndigoAir, Par get Airways, SpiceJet III. terror from substitution Road and rail work posing a major threat by offering cheaper, reliable, convenient services. Travel.In case of steeper Air fine fares, Air India could lose potential customers to Rival airlines and Indian Railways. The surmisal of loss of market share to Indian railways further increases by the fact that everywhere a close of time the rail ticket fares have marginally varied compared to significant disagreement in air ticket fares. IV. negociate power of suppliers 1. Slow nature of aircraft sales, because the high value order placed by the industry can calculate some(prenominal) years to be delivered. 2. Labour unions are suppliers who have significant power.The performance and flexibleness of the entire industry depends heavily on labour unions. 3. air travel fuel is a commodity and its wrongs are decided by market forces and existing geopolitical factors much(prenominal) as OPEC. At times, oil producing nations at the behest of OPEC manipulate oil production backside in order to keep the prices of stark naked to suit their profit intentions. High apostrophize of fuel accounts for about 35% of the chalk up cost and increasing cost is a threat to the companys profits. 4. Aviation Turbine Fuel (ATF) is a major cost component for the Airlines in India.It is about 40% of the operating cost of the domestic carriers V. negociate power of buyers The dicker power of buyers refers to the amount of pressure customers can place on a business, thus, affecting its prices, volume and profit potential. Various airlines are competing for the same customer, which also results in strengthening the buyer power. Hence, the bargaining power of customers in the airline industry is very high since they are price sensitive and search for the best deals available. Customers are price sensitive.Many new players who are Low Cost Carriers attract these travelers by offering them low fares and those that are doohickey oriented by providing them with frequent flights. bit choosing which airline to fly with, customers enjoy transmutation costs through frequent placard programs created by some airlines. PEST Analysis PEST analysis stands for political scienceal, Economic, Social, and Technological analysis and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. Some analysts added Legal and Environmental and rearranged the mnemonic to PESTLE.It is a part of the external analysis when conducting a strategic analysis and gives an overview of the diametric macro environmental factors that the company has to take into consideration. It is a useful strategic dig for understanding market growth or decline, business position, potential and direction for operations. * Political f actors are how and to what degree a political relation intervenes in the industry or firm. Specifically, political factors take on areas such as appraise policy, labour law, environmental law, trade restrictions, tariffs, government policies and political stability. Economic factors include economic growth, interest rates, exchange rates and the flash rate. These factors have major impacts on how businesses head and make decisions. * Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the strike for a companys products and how that company operates. * Technological factors include scientific aspects such as RD activity, automation, technology incentives and the rate of proficient change.They can determine barriers to entry, minimum streamlined production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation. In case of Air India, the analysis of external environment is as follows Having done the postulate analysis, now let us measure the opportunity and threats. 1 Poor view as over decision making T 2 Drop in oil prices* O 3 heavy train and interference of government O 4 worsening service image T 5 Labour union T 6 inclination of society towards low cost travel T spherical recession T 8 significant air traffic growth over a period of time O 9 restriction on FDI in Indian aviation industry O 10 Mergers among competitors T 11 possibility of opening of aviation market and privatization T 12 interest burden of new aircraft orders T 13 companys image perceived as public carrier T 14 near monopoly among Indian players in international routes O 15 over capacity of industry T 16 poaching of pilots from competitors T 17 declining debt fair play ratio T 18 changes in ground handling policy T 19 agency problem THere T indicates Threat and O indi cates Opportunity Assigning the weightage to the important factors, in the sense of their importance in analyzing external environment and using rating exceed of 1 to 5 where 3 indicates average kindness of the external environment, we get- As the quantified average of all the external environment factors is glide path slightly below average, we conclude that, the circulating(prenominal) external environment is not favorable to Air India but, it can work on its decision making process and feeler of service image as an present(prenominal) measure.