Assignment :01

Topic : Airline / aviation industry

Name : Wali ur Rehman(FA18-MBAG-0037)

Program : MBAG

Submitted To : sir, khurram khan

Date : 20/10/2019

Subject : Marketing Intelligence

Topic : Airline Industry

 Airline industry

Introduction

The variation industry is the back bone for any country and one of the most global industry
which is connects to the people business and culture across continents commercial airlines
industry is more then 100 year the first commercial flight embarked on a short journey just 34
kmc and today airline industry supporting 63 millions job and contribute to $ 2.7 in global GDP.

In 2016 airlines carried worldwide around 3.8 billion passenger annually with 7.1 trillion
revenue passenger and fifty- three million tonnes of the freight were transported by air reaching
205 billion freight tonnes and around 10 million passenger transport USD 18 billion worth of
goods.

Five Forces Model

Five forces modal that helps to analyzing the of competition with the certain industry. It was
useful when someone want to start new setup accordingly to this theory competitiveness doesn't
only come competitors and also Depend on the nature of the industry five basic factors.

 Threat of new entrant

 Bargaining power of supplies
 Bargaining power of buyer
 Threat of substitute products and service
 Existing industry rivalry

Threat of of new entrants

The threat of new entrant in the airlines industry can be consider is medium.Its required some
highly investment for new start-up ( e.g purchasing aircraft) basically also required
license,insurance and distribution channel and other qualifications it will not quite easy for those
who are enterning in such business.that business required some high professional and skill
people to cut cost and also increase service level but new enternet not have that much skill or
experience people to compete with already existing organization crating a competitive
disadvantage right from the start.

Bargaining power of suppliers

The bargaining power of supplier in airlines industries can be considered very high when looking
Major input that industry need such fuel and aircraft basically these input are much effect by the
external environment and also airlines company little control on the price of fuel which very
unpredictable the air-crafts only two major supplier such Boeing and airbus there for they have
substantial bargaining power .

Bargaining power of buyer

The bargaining power of buyer interm of industry is also high but in customer point of view its
change customer can easily to check the price of different airlines companies within the fingers
tips their are many website to heck the price their not any switching cost just involve the process
customers are price conscious always preferred low cost traveling preferred brand loyalty don't
matter in such industry .

Threat of substitute products

entrant of airlines industry it can be said that the general need of customer is traveling it should
be clear their are many alternative available for traveling besides airplane depending on the
emergency. customer can takes car , train and bus the customer have more options. threats of
substitute in this industry medium to high.

Rivalry among the existing competitors

When looking at airlines industry we examine that the industry is very competitive because a
number of reason which includes high investment required and tight regulation and licensing
policies which consider high barriers for the new entrants .

Forces Ranking Reasoning

 Treats of New entrance  High  High investment

 Internal rivalry  Medium  High investment

 Bargaining power of  High  Less supplier

supply

 Bargaining power of  High  Less buyer

buyer

 Substitute  High  Hard to copy

 Government  High  More rules regulations

What is the McKinsey 7s model

The McKinsey 7s model is a structure for organization effectiveness that postulate that is seven
internal elements of an organization those elements need to be proper aligned with the
organization goal That's seven factor factor can classified as HARD and SOFT elements hard
skill influence by management activities and soft skill deal with corporate culture .

According to MCKINSEY Two types of elements :

 Hard elements  Soft elements

 Strategy  Staff

 Structure  Style

 System  Skill

  Shared values

Aligned?

 Strategy  Market penetrate Yes

 Structure  Formal structure Yes

 System  Order and processing Yes

support system

 Skill  service offering related Yes

skill related.

 Staff  Reward system Yes

 Style  Democratic No
management style

 Share value  Core competency No

Explanation of above Example :

A large scale industry with 500+ employees and maintain with 50% market share in domestic
market its structure need to be change and well-oiled bureaucratic mechanism.the business
expand and its staff need to introduce new motivation and control and reward system shared
value also need to be company values enthusiasm and excellence.

Market attractiveness

High

Middle

Low

High Middle Low

Market strength /company potential

Total annual growth of the aviation industry

according to the current report over the 25,000 aircraft in service world wild almost 6 trillion are
flow by pass-angers are across the world-wild.Annual income of aviation is around 4%.

Top five airlines of Pakistan

 Air blue
 Askari aviation
 shaheen air
 serene air
 Pakistan international

Four airlines in process to launching operations in Pakistan

 Afeef Zara airways

 Go Green
 Liberty air
 Sial air
Muhammad afsar malik the additional Director of the aviation Authority (CCA) said the open
skies policy has been fruitful for Pakistan routes mentioned below will help the airlines huge
profit due to the emergence of the China Pakistan economic corridor (CPEC).

As per the reports, the new airlines will cover these routes:

Bannu Muzaffaeabad

Chitral Panjgur

Dalbandin Parachinar

Gawadar Skardu

Khuzdar Muzaffarabad

Suggestion

Pakistan domestic market has diminished capacity because of increasing trend of fuel prices.
Slow down the industry. According to some industry experts, keeping in view market capacity
and challenges related to the aviation industry these new licensing to airline industry, does not
make any sense because its hard compete with the domestic market because when all the
revenues in Pakistani rupees where pay to vendor for spare and service in US dollar and thought
for new intranet.

References

https://www.google.com/&sourse-industry-in-pakistan-present-past-and-future
https://www.google.com/url?sa=t&source=https://www.researchsnipers.comcom

https://www.google.com/url?
sa=t&source=web&rct=j&url=https://www.caapakistan.com.pk
https://www.google.com/url?sa=t&source=web&rct=j&url=https://brandongaille.com/19-
pakistan-aircraft-industry-statistics-and-trends

https://www.google.com/url?sa=t&source=web&rct=j&url=https://pbr.iobm.edu.pk/wp-
content/uploads/2016/01/4

https://historyofpia.com › firsts Pakistan International Airlines - History of PIA

https://www.researchsnipers.com

https://www.investopedia.com/terms/m/mckinsey-7s-model.asp

Https://www.Porter's Five Forces

Public expenditure on education as a percentage of gross domestic product (GDP) is estimated to be

2.2 percent in financial year 2017 as compared to 2.3 percent of GDP in financial year 2016.

Likewise, the Economic Survey says that the education-related expenditure increased by 5.4 percent to
Rs699.2 billion in financial year 2017 from Rs663.4 billion financial year 2016. It noted that the
provincial governments also are spending sizeable amount of their annual development plans on
education.

A total of 5.1 thousand higher secondary schools/inter colleges with 120.3 thousand teachers were
functional in 2016-17. A decrease of 6.1 percent in higher secondary enrolment has been observed as
it dropped to 1,594.9 thousand in 2016-17 against 1,698.0 thousand in 2015-16. It is estimated to
increase by 9.8 percent i.e. from 1,594.9 thousand to 1750.6 thousand in 2017-18.