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Sas Cargo Porter's Five Forces Analysis

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Services and SAS Cargo was to be discontinued and outsourced to third parties. SAS has a huge cost for staff compared to its competitors (see appendix xx). In By outsourcing the operations, SAS will be able to minimize the cost without compromising its core competencies. Porter's five forces compare with Barney Resource Based View theory The theory of five competitive forces by Michael E. Porter shapes the strategy of firms and the nature of competitive interaction within an industry. There is a widespread rivalry that results from all five forces (Porter, M.E. 2008). The model has been criticised due to the fact that innovation is not taken into account, since this model is cross-sectional and not longitudinal. That means that it only …show more content…

The oligopolistic market is highly concentrated, which means there are few market leaders within the same industry, providing the same services. In the airline industry, each company has a limited pricing power. As a result, whenever an airline follows the strategy of lowering prices, it is likely that the other companies will follow the same path. That is because, in the event of a company tries to raise its market share, the other existing competitive companies fight back to keep their customers and to remain competitive. However, as often found in oligopolies, the term of customers’ loyalty is encountered. Since SAS is a company that is now one of the oldest airline companies in the world, people may not be entirely affected when a competitor offers a lower …show more content…

Some organizations reach specific stages faster than others, even though they are operating in the same industry. SAS belongs to the airline industry. They segmented their service to meet their target group needs. The company is considered to be in the maturity phase of the life cycle model. That is the moment when slow growth is indicated by a flat lifecycle curve. It is the stage where the strategy of the firm must stress the unique features of the service and differentiate the firm’s offerings from industry competitors (McGahan, A.M., Argyres, N. and J.A.C. Baum, 2004). When it comes to innovation, firms in that stage continue to innovate, but those innovations cannot be as radical as before. That is why SAS remains competitive by offering existing and new products for their target market, the business and leisure travellers, through loyalty programmes. SAS’s latest differentiation strategies included updating their on-board service concept, implementing an extensive upgrade of EuroBonus, launching an improved app, increasing efficient self-service facilities and offering the possibility of a journey with SAS Lounges and Fast

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Another aspect of Porter’s Five Forces model is the threat of substitution, or how easy it would be for another company to take over the present business by innovating in some way. The threat of substitution is low but still present in the trucking industry. Due to the fact that a large majority of freight moved in the United States is moved by truck, it would be difficult to shift to a different mode of transportation. However, there are still other methods of travel that can be used, for example freight can be moved by airplane or by train within the United States. These alternative modes of transportation tend to be more expensive though, meaning it makes more sense for a company to simply purchase the services of a trucking company.

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3 Porter’s Five-Forces Model Analysis Different factors can be combined together in a simple business model. This is known as Porter’s Five-Forces Model and competitive circumstances of an industry can be analyze through this model. These five forces are critical forces that they determine the attractiveness and competitiveness of an enterprise and have influence on a firm’s profitability in its industry. The five-forces analysis can not only show how Walt Disney company builds a sustainable competitive advantage in Entertainment-Diversified industry but also can seize business opportunities in future development.

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The Porter’s model was created by Michael Porter in 1979. It is used to understand the structure of the industry and level of competition in that industry. It specifies the effect of five forces on an organization which are Threat of new entrants, Bargaining power of buyers, Bargaining power of suppliers, Threat of substitutes and Rivalry among existing competitors. The organization is less profitable if competitive forces are high. The model specifies where the actual power lies (Jurevicius, 2013).

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This theory is based on the concept that there are five forces that determine the competitive intensity and attractiveness of a market. Porter 's five forces help to identify where power lies in a business situation. This is useful both in understanding the strength of an organization 's current competitive position, and the strength of a position that an organization may look to move into. Strategic analysts often use Porter’s five forces to understand whether new products or services are potentially profitable. By understanding where power lies, the theory can also be used to identify areas of strength, to improve weaknesses and to avoid mistakes.

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With the proven track record, SIA continues to bloom despite the uncertainty of the airline industry and

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Porter’s five forces interact to shape the competitive landscape facing port authorities and port service providers. The 5 forces are stated below; 1. The rivalry among existing competitors 2. The threat of new competitors 3. The potential for global substitutes 4.

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Each of the forces is determined how competitive in that industry as well as the structure of the industry. Porter’s five forces factors are consists of competitive rivalry, the threat of new entrants, the threat of substitutes, bargaining power from

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