MGT302A Assessment: Porter's Five Forces Analysis of Qantas Airlines

This report provides a comprehensive strategic analysis of Qantas Airlines by applying Porter's Five Forces model. The analysis explores the bargaining power of buyers and suppliers, the threat of substitutes and new entrants, and the competitive rivalry within the airline industry. The report examines the external environment Qantas faces, considering factors such as customer choices, supplier options, potential alternatives to air travel, and the competitive landscape dominated by firms like Virgin Airlines. The report also discusses the usefulness and limitations of the Porter's Five Forces model, emphasizing the importance of considering both threats and opportunities for strategic decision-making. The conclusion highlights the potential for Qantas to collaborate and form joint ventures to improve its market position. The analysis is based on academic sources and provides a framework for understanding the competitive dynamics within the airline industry.

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Introduction
I think that each and every business organizations need to analyze their internal and
external environments for the proper working of their operations. As per my opinion, the main
purpose of this essay is to talk about Porter's five force analysis because it is a very important
tool for doing a thorough analysis of the forces active in the business environment. I think that
Porter's five forces model is one of the most important tools for seeing the forces that are going
on in the external environment. I consider Porter's five forces theory is one of the most important
theories because it helps a company to get a clear idea about the strategies that are being used by
their competitors (Halpern, 2018).
A brief summary of Porter's five forces model
It is important for the industries to have a clear idea about the strategies that are being
used by the firms who pose a tough competition to the firm. Qantas Airlines is one such well-
known industry that will be using the porters five force analysis model so that they can get a
clear idea about the strategies that they can use in the future days for improving their position in
the future days (Porter & Heppelmann, 2014). Qantas, being an airline industry it must be very
careful about the forces that are existing on the market and can attract the attention of the clients
in order to make sure that their client base is not being reduced they have to have a very good
idea about their external environment. There are other many talented and well-known airlines
company like The United, American Airlines, Singapore Airlines and other such airline
companies that are much talented. So Porter's five forces model will be used for knowing about
the position that Qantas is currently enjoying among their suppliers and the buyers
(Bamber,2018). As per my opinion, this model will also be very helpful for providing Qantas

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Airlines a clear idea about the threat of the substitutes that can enter the market and pose a great
threat to their business (Greig, 2018).
Application of the model
 Bargaining power of buyers- The bargaining power of the buyers is very high in this
airlines market. This is because there are already so many options in the airline's industry.
All these industries have opted for a large number of comforts and feasible options for
the customers. So there is a chance that the customers can switch over to the other
options. The customers also have many options to select from like the economic class,
premium class, and many other such options. So it is important for Qantas to develop
some very new and innovative technologies like the seasonal discount offers, special
meals and others (Dobni, Klassen & Sands, 2016). By building a large amount of
customer thy will be getting a twofold benefit. This will reduce the bargaining power of
the buyers and also the company will be able to streamline its sales properly and earn
profit.
 Bargaining power of the suppliers-The bargaining power of the suppliers is lower as
there are many options available to the airline's industry. It is for this reason that there
many options available like one of the major airline that is the Virgin Airline. The larger
the base of the customers the stronger will be the ability customers to ask for newer
products at a discounted price.
 The threat of the substitutes-The threat of substitute in the airline industry is lower as
people do not really find any other means of transport that will carry them over such
distances within such a short time period. However, people might be looking for some

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substitutes or same alternatives within the airline industry itself. They might look for
some other cheaper airlines that would be easily afforded by them. So, Qantas must keep
on upgrading itself with the best and the latest technology. They can work on opening up
many new flights to few places and also construct airports in the major and the minor
areas as well (Ellis, 2016). This will enable people to avail the airlines rather than opting
for the other routes like a ship, land transportation system such as cars and others
(Sutherland, 2014). However they must try to deal with this issue by being more service
oriented that is by diversifying in the number of services rather than the number of
products.
 Rivalry among the existing firms-This is one of the major topics in the modern day
Australian Airline Industry. This is because there are many firms that are entering the
market and are updating themselves with the best of the technologies available (Williams,
2017). This is the means by which they can get the number of customers. At present, the
Virgin Airlines is the strongest competitor of the Qantas Airlines. So, Qantas have to alert
and give tough competition to the competitors (E. Dobbs, 2014). They work in a very
highly competitive industry and it does have a lot of pressure on it.
 The threat of new entry-The threat of new entry is more or less lower. This is because it
is tough for a totally new airline industry to establish itself and give a very tough
competition to the already existing and gigantic airlines like the Qantas other Virgin
airlines. Any new entrants will require a huge amount of fund to invest. So, Qantas must
not worry about the entrance of new firms but most combat the fight that is being put up
by the existing firms in the market (Klijn et al., 2014).

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Usefulness and limitations
I think that the porter five forces analysis will be helpful for the company to understand
the external environment. However, at the same time, there are points that must be seen in a
different way. This model gives equal importance to the buyers like it gives to the suppliers and
the substitute or the entry of the new firms. I think that the buyers are the greatest asset of the
company and so they must be giving more importance to them than to any other aspects.
Moreover, I feel that this model must not be taken only as a threat to the company but also as a
good opportunity for taking innovative ideas from the competitors and the other existing firms.
As per my perception, the external environment might at times be a threat but at the same time, it
can be a good cooperation and a source of the useful joint venture as well.
Conclusion
So, I would like to conclude by saying that Porter's five force model can be a good source
of getting the information about the external world. However, at the same time, I feel that
companies must be able to see at the positive aspects as well. Qantas might be afraid that Virgin
airlines will give a very tough competition to them that at the same time they may also exchange
some very good ideas and form a joint venture business with them. I think that this positive
approach will be very important and will benefit both the companies at the same time.

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References
Bamber, G. J. (2018). Low-cost airlines’ product and labor market strategic choices: Australian
perspectives. Members-only Library.
Dobni, C. B., Klassen, M., & Sands, D. (2016). Getting to clarity: new ways to think about
strategy. Journal of Business Strategy, 37(5), 12-21.
E. Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), 32-45.
Ellis, D. (2016). Global airline cooperation: equity stakes, strategic partnerships and alliance
membership.
Greig, D. (2018). When does Airline Competition Become Predation?. In Competition versus
Predation in Aviation Markets (pp. 95-102). Routledge.
Halpern, N. (2018). Airport business strategy. The Routledge Companion to Air Transport
Management, 154.
Klijn, E., Reuer, J. J., Buckley, P. J., & Glaister, K. W. (2014). Combinations of partners’ joint
venture formation motives. In The Multinational Enterprise and the Emergence of the
Global Factory (pp. 203-219). Palgrave Macmillan, London.
Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming
competition. Harvard Business Review, 92(11), 64-88.
Sutherland, E. (2014). Lobbying and litigation in telecommunications markets–reapplying
Porter’s five forces. info, 16(5), 1-18.

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Williams, G. (2017). Airline competition: deregulation's mixed legacy. Taylor & Francis.