Porter's Five Forces Analysis of Qantas Airlines

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Introduction
An environmental analysis helps the managing department of a company to determine
and implement business strategies for the betterment of the entire company in future. Having
known all the constituents that are responsible for a company’s rise and development, a company
can design suitable methods by which it can grow and sustain in the highly competitive market
satisfying all the needs and expectations of the customers. Porters’ five force model is tool that
helps to analyze the external environment of a company. In the present essay I will throw light in
the competitive environment of Qantas Airlines with the help of porters’ five force model. It will
also examine the limitations and usefulness of the tool and will conclude by giving an overview
of the entire paper.
A brief summary of Porter’s Five Forces model
In the year 1979, M. Porter had created certain tools or models to determine the various
external factors that define the industry a company deals in. Among the many tools, Porters’ five
force model has been considered as the most effective tool which contains the bargaining power
of the buyers, bargaining power of the suppliers, threat of new entrants, threat of substitutes and
threat of industry rivals (Rothaermel, 2015). This model determines the competition in the
industry and recognizes the profitability. The industry structure can evaluate how much a
company can flourish in the market. The threat of new entrants in a particular industry enables a
particular company to try out different innovative strategies so that the new entrants cannot
snatch the market advantage. Similarly, the threat of substitute can identify other similar
products or services in the market provided by other companies. The bargaining power of the
suppliers and the customers must be analyzed in order to know the profitability and pricing

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potentiality of the company in the market. The analysis of the existing market giants, a company
can find out the competitive advantage and work on the gap to attract the target market and
potential customers.
Application of the model
Qantas airlines is a famous airlines company based in Australia. It is recognized for
providing air travelling services to the people of Australia and also beyond Australia. It operates
in both the national as well as in the international market. It occupies a significant market share
in the airlines industry of Australia that is almost 65%. However, through the past years the
performance of the company has been reported to go not so well due to the rising competitive
pressure that the company is experiencing (qantas.com, 2018). The Porters’ Five Force analysis
of the industry of Qantas airlines is as follows:
Bargaining power of the buyers
It is inevitable that the customers prefer to avail premium service at reasonable price.
Hence, if they do not get satisfied with one company, they move on for the other. The consumers
have high bargaining power with the Qantas airlines because the switching cost is low. The
customers tend to choose that company which values their money in the best possible way giving
the same service. The customers compare the services before choosing using the IT tools such as
the SkyScanner and Flight Center (Alexander & Merkert, 2017).
Bargaining Power of the Suppliers
The large airlines like the Qantas get the supply of gods from the suppliers like Airbus
and Boeing. The Qantas airlines invests more than US $ 17 on high technology, fuel efficient
aircrafts. In order to avail the fuel efficiency, the Qantas airlines is highly dependent on the