Tapan Ankleshwaria

MBA Sem-1
Management Information System
Porter's Five Forces is a business analysis model
that helps to explain why various industries are
able to sustain different levels of profitability. The
model was published in Michael E. Porter's book,
"Competitive Strategy: Techniques for Analyzing
Industries and Competitors" in 1980.1 The Five
Forces model is widely used to analyze the
industry structure of a company as well as its
corporate strategy. The five forces are frequently
used to measure competition intensity,
attractiveness, and profitability of an industry or
market.
 New
Entrants

Suppliers Industry
Competitors
Buyers

Substitutes
Porter’s five force analysis is a frame work used for the industry analysis of
an organization. It was used to recognize the current market position of the
organization. Now the analysis for Air India.

1. Threats of New Entrants

Threats from new entrants for Air-India is very high. The initial investment
for the new entrants into the air lines industry is very huge in amount. In
olden days, it is very difficult to start a new air line company, but in recent
times, banks are providing good opportunities to the new entrants, by
providing long term loans with less interest rate. So this will be a threat for
Air-India from the upcoming and new domestic air lines.

2. Threats from the Competitors

Threats from the competitors for Air-India is very high. The competitive
rivalry within the air line industry is very intense, as many major air lines
are operating the flights to the same destinations, all over the world. Air-
India is facing major threats from the industry competitors like Emirates,
Jet Airways and Air Asia etc. The major airline companies are very
aggressively competing each other by offering travelers privileges for

Cont…
 regular customers, reducing the fares and offering high quality services etc,
to attract more customers than their rival companies. So Air-India was
facing high threat from its rival companies.

3. Bargaining power of the buyers

The threat from the buyers is intensively high for an organization like Air
India. As more domestic and international air line companies are operating
their flights to the same destinations with low travelling fairs, the customer
can choose from a wide variety of travelling plans offered by the different
companies. Then the power of the buyer is very high, as the competition
between the companies is more. Air-India is already running in losses, the
customer may demand more. At international level this buyer threat is
somewhat moderate, but at domestic level, it was very high.

4. Threats from the substitutes

Threats from substitute products is Very Less for Air-India Airlines are the
fastest possible ways to travel from place to place, so there is less threat
from the substitutes. However, by considering at domestic level, the
Cont…
 customers can choose railways or roadways that are connecting different
places. But still it is time consuming. The only one factor that makes
people to think about alternate travel options like trains or buses is the cost
of air travel, which was expensive for the people of developing countries
like India. So there is a little threat at domestic level, but very less threat at
international level.

5. Bargaining power of suppliers

The threat from the bargaining power suppliers is moderate for Air-India.
Suppliers for Air-India are very less in number. The major suppliers for the
company are Boeing and Airbus. From the international aviation surveys,
there is no cutthroat competition between Boeing and Airbus, so there less
chance of bargaining with the customer. However an airline company like
Air- India, which was running in losses, the suppliers may demand
regarding the payment options. And it was already known that, Air-India
already owes $90 million of Boeing.
According to my point of you because of the Covid-19 Crises Air
India has to cut down all the unnecessary routes, which are
making losses. However for prestigious purposes, they have to run
the flights in those routes, at least they have to provide the list of
those routes to the government, such that the government can
subsidize those routes.
 Collaboration with major international air line companies will
be helpful.
 There is a need for Air India to establish a new fleet with mid
and small sized aircrafts, to serve the less busy routes.
 Air-India has to appoint, highly skilled managers from private
sector, in order to turn over the situation.
 Inability in the management has to be eliminated, by appointing
a firm and constant management and director, as government is
changing the management frequently.
Cont...
 Ratio of manpower to number of aircrafts has to
be reduced, in order to reduce the staff costs.
 The unnecessary aircrafts have to be rented or
they can sell those aircrafts. For example, half of
Air-India’s Boeing 747 aircrafts are remaining in
the hangers, without regular usage. The company
have to gave them for rent or have to sold them,
in order to generate some revenues and to reduce
the maintenance costs.
 Quality of services and aircraft maintenance
have to be improved.
 The organization has to encourge the private
investment, in order to recover some costs.