Airline Industry Analysis
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I need help answering the following assignment. See attached article.
1. Discuss the structural characteristics of the airline industry from the point of view of the Porter Five Forces framework.
2. Discuss the United-Continental merger from the perspective of the Acquisition Integration Approaches framework.
3. Discuss the United-Continental merger from the perspective of the Competitive Advantage (Porter) framework.
Thank you.
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Solution Summary
This solution provides a thorough discussion on the United-Continental merger using the Five Forces Framework, the Acquisition Integration Approaches framework, and the Competitive Advantage (Porter) framework.
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Here is the general direction I would go with each question:
1. The Porter's model is based on five components: supplier power, buyer power, competitive rivalry, substitution threats, and new entrant threats. From the standpoint of a structural characteristics framework, we can see where the emphasis for each component of the framework would be on the size of the industry. The airline industry is one of the largest industries in the world, and that's because of the nature of the trade and also because of the size of assets (planes, airports, etc.) required in the trade. Structurally, this gives the industries power to a great extent over suppliers assuming that there are no substitute suppliers to an excess number. Because the industry has a large amount of working capital (i.e. cash) to work with, the power remains with the industry. If the airlines aren't satisfied, they can simply seek out a competing supplier. Suppliers can drive prices up, but the airline industry also has the power to drive prices down ...
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