Assignment Strategic

8/3/2019 Assignment Strategic

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AIRLINE INDUSTRY:

The Airline is one of the major industries in the world today and is majorly affected by Michael Porter's "Five Forces"

model. The following write up conducts an analysis on how the model affects the airline industry today.

The central force of Porter's model is Internal Rivalry within the Industry. In case of the Airline industry, this is themost important force today, especially since the market is completely saturated. There are more service providers

than needed in both local as well as international markets. The various airlines are competing for the same customer,

which also results in strengthening the buyer power, another of Porter's forces. Moreover, a lot of airlines such as

Qatar Airways and Emirates have a brand name which they have to defend so they compete in doing so. The airlines

are continually competing against each other in terms of prices, technology, in-flight entertainment, customer

services and many more areas. The net result of this competition between companies is an overall slow market growth

rate.

One of the forces that Porter describes is Entry into the industry. In the world today, the airline industry is so

saturated that there is hardly space for a newcomer even to squeeze its way in. The biggest for this is the cost of entry.

The airline industry is one of the most expensive industries, due to the cost of buying and leasing aircrafts, safety and

security measures, customer service and manpower. Another major barrier to entry is the brand name of existing

airlines and it is really difficult to lure customers out of their existing brands. On the other hand, a newcomer couldenter this saturated market easier with a completely new concept and/or technology. This was the case when

Southwest entered the airline industry, with the new concept of budget or low cost travelling. The new concept was

appealing to whole new universe of customers who previously would have thought multiple times before deciding to

fly instead of driving.

Concerns of airline:

1-competitive within the airlines-This is the rivalry which other airlines in your existing markets or future markets.

Take for example, Malaysia airline, the possible market segments are:

(a) Geographical markets

(b) Demographic

(c) Travel purposes

Let view one of the segment, geographical...for Malaysia. We can see straight away the prominent competitor which is

air Asia. The competitor will be one of the considerations for us to develop our strategy.

THREAT FROM SUBSTITUTION:

Lets have a look at the market segment based on travel purpose. So one of the purposes for travelling is for business

dealing, like meeting or discussion. With the advancement in internet, some of the discussion can be done online

either through video conferencing or simple chatting.

THREAT OF NEW ENTRANT:

Like the case of two airline in Malaysia,MAS and air asia, there is always possibility that another airline will be formed

to service the existing market. The likeliness of another airlines being formed, will depend so much on the barrier to

entry and the lucrativeness of the business.


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THE POWER OF THE BUYERS:

Some company have small number of customers which purchase a high volume of the product. Taking the example of

Malaysian Helicopter company (MHC) who has customers like SHELL and PETRONAS, will acknowledge the powerthese two buyers have. They can dictate what type of helicopters to operate and the price of tickets. For airline such as

MAS, with multiple segments and without single large customers, the power of buyer is not too obvious.

SUPPLIER POWER:

Some airline operate using a single type of aircraft, for example Boeing, then the seller will have great power over the

airline. For that reason, most airline will opt for multiple suppliers. It will also have the added advantage of getting a

better deal, because the like of boeing knows that if the deal is not attractive , the airline will go to airbus.

APPLE:

Apple, which is strictly focussed on design and marketing, outsources the manufacturing of most of its products, but

is fairly vertically orientated towards the customer-side, doing most of its business in its retail-locations and online

stores. Because of this concentration of power in the middle and proximity to the customer, it also has more power

over its suppliers, able to make strong demands, and it's also better equipped to compete with horizontal players like

HP or Sony, who are not as vertically integrated towards the consumer. The added benefit of a close customer-

presence is also that you can use this as an opportunity to create customer-focussed products, something a lot of non-

verticallly integrated players are not so good.

IKEA:

A final example is Ikea, which is surprisingly similar to Amazon. It also started as a distributor, back in the day whena store-front was a newspaper-advert and phone-line. Ikea saved money, by working closely together with

manufacturers in Poland, even building and buying machinery for them. The end-result were standardised designs, at

low costs, and produced on a massive scale. It became close to the customer, by using its warehouses as store-fronts,

and enabling customers to buy via catalogue and later via the web-site. Its competition was the traditional furniture

store, conservative and producing designs that were both expensive and focussed on exclusivity (which translates to

small-scale production). Because of this perceived strength, they were arrogant enough to not worry so much about

prices on the vertical axis, both from their suppliers and for their customers. All of which could be exploited by some

frugal and out-of-the-box thinking (a combo which fits surprisingly well together).


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PEST ANALYSIS OF COCA-COLA:

Political Analysis:

Non-alcoholic beverages fall within the food category under the FDA. The government plays a role within the

operation of manufacturing these products in terms of regulations. There are potential fines set by the government on

companies if they do not meet a standard of laws.

The following are some of the factors that could cause Coca-Cola company's actual results to differ materially from the

expected results described in their underlying company's forward statement:-

Changes in laws and regulations, including changes in accounting standards, taxation requirements,(including tax rate changes, new tax laws and revised tax law interpretations) and environmental laws indomestic or foreign jurisdictions.

Changes in the non-alcoholic business environment. These include, without limitation, competitive productand pricing pressures and their ability to gain or maintain share of sales in the global market as a result ofaction by competitors.

Political conditions, especially in international markets, including civil unrest, government changes andrestrictions on the ability to transfer capital across borders.

Political structure and legal considerations also have impinged on Coco-Cola Companys strategies. Governments of

some Arab nations boycotted Coca-Colas products due to a political dispute and discontented with the company for

maintaining distributors in Israel.

Economical Analysis:

Being flexible and willing to change to satisfy consumers needs, has enabled Coca-Cola to exploit the economies of

scale that was gained by its global marketing and at the same time making its products appeal to local taste, which

these have earned the company an enormous profits quarterly.

As Coca-Cola has expanded over the decades or even nearly a century, the company has benefited from the various

cultural insights and perspectives of the societies in which business is done. No doubt of the remarkable experience it

has, it is still very committed to local markets, to paying attention to what people from different cultures and

backgrounds like to drink, and where and how they like to drink it, to remain competitive and to develop more new

drinks to satisfy its markets.


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Now, the estimated brand equity of Coca-Cola is $84billion, market share of more than 50 percent in beverage

industry globally and about 70 percent of its income comes from countries outside United States. Every 10 seconds,

126,000 people in the whole world, choose to reach out for one of The Coca-Cola Company brands, and it is the

companys mission to make that choice exciting and satisfying, every single time.

Previously the U.S. economy was strong and nearly every part of it was growing and doing well. However, things

changed. Before the attacks on September 11, 2001, the United States was starting to see the economy recover slightly

and it is only just recently that they achieved the economic levels. Consumers are now resuming their normal habits,

going to the malls, car shopping, and eating out at restaurants. However, many are still handling their money

cautiously. They believe that with lower inflation still to come, consumers will recover their confidence over the next

year. As researching for new products would cost less the Coca-Cola Company will sell its products for less and the

people will spend as they would get cheap products from Coca-cola.

Social Analysis:

Foreign environment factors have influenced the Coca-Colas strategies in international marketing. Culture has a

tremendous effect on peoples preferences and perception. Language is one of the aspects of culture that marketersmust take care of, in term of translating product name, slogans and promotional messages so as not to convey the

wrong meaning. Coca-Cola did not look much into this aspect when entering into the markets of countries like China

and Taiwan as the literal translation of Coca-Cola in Chinese characters mean, bite the wax tadpole.

Changes are necessary in international marketing for consumers products, as it is important that the products suit

ones taste, preferences and fulfill ones needs. Coca-Cola has continued changing, improving and developing new

drinks to appeal to local tastes.

After discovering that Coke did not appeal as much to Japanese consumers, Coca-Cola developed over 30 new drinks

for the Japanese market, which inclusive of Asian tea, English tea, coffee and fermented-milk drink.

In China, Coca-Cola has also begun the similar strategy of introducing beverages developed for the taste buds of localmarket. It launched a fruit juice drink called Tian Yu Di (Heaven and Earth) specifically for the Chinese market with

planning of introducing the market with a Chinese iced tea and soy milk drink.

Many U.S. citizens are practicing healthier lifestyles. This has affected the non-alcoholic beverage industry in that

many are switching to bottled water and diet colas instead of beer and other alcoholic beverages. Also, time

management has increased and is at approximately 43% of all households. The need for bottled water and other more

convenient and healthy products are in important in the average day-to-day life.

Consumers from the ages of 37 to 55 are also increasingly concerned with nutrition. There is a large population of the

age range known as the baby boomers. Since many are reaching an older age in life they are becoming more

concerned with increasing their longevity. This will continue to affect the non-alcoholic beverage industry by

increasing the demand overall and in the healthier beverages.

Technological Analysis:

Some factors that cause company's actual results to differ materially from the expected results are as follows:

The effectiveness of company's advertising, marketing and promotional programs. The new technology ofinternet and television which use special effects for advertising through media. They make some products


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look attractive. This helps in selling of the products. This advertising makes the product attractive. Thistechnology is being used in media to sell their products.

Introduction of cans and plastic bottles have increased sales for Coca-Cola as these are easier to carry andyou can bin them once they are used.

As the technology is getting advanced there has been introduction of new machineries all the time. Due tointroduction of this machineries the production of the Coca-Cola company has increased tremendously thenit was few years ago

Coca-Cola has six factories in Britain which use the most state-of the-art drinks technology to ensure top product

quality and speedy delivery. Europe's largest soft drinks factory was opened by CCE in Wakefield, Yorkshire in 1990.

The Wakefield factory has the technology to produce cans of Coca-Cola faster than bullets from a machine gun.

NBP:

PEST analysis include political, economical, social and cultural, technological analysis of national Bank of Pakistan.

POLITICAL:

(1) Privatization and de regulation policy.

(2) Impact of subsidized credit affecting NCBs.

(3) Employment practices, unions association.

(4) Political interference and harassment

(5) Incidents of high taxation in banking industry.

ECONOMICAL:

(1) Constraints in mobilization of public saving because of inflation.

(2) Staff cost

(3) Operating cost

(4) Bad debts

SOCIAL & CULTURAL:

(1) Inadequate human resources

(2) Cultural constraints to savings

(3) Defaulters Lobby


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(4) Declining education and work ethics.

(5) Inadequate accountability.

(6) Adequate empowerment

TECHNOLOGICAL:

(1) Inadequate communication infrastructure.

(2) Inadequate computer facilities

(3) Inadequate IT training.

(4) Very less computer knowledge

(5) Traditional methods are used in the branches.

Assignment Strategic

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