Airline Industry

The absorbtion of a ships family is often a uncorrectable task. Critical knows to consider, include organizational floriculture, technology, socio-culture, brand equity, and positivity of the firm. Organizational culture is the roughly important issue to consider when acquiring some other company. While some cultures differ from others, that doesnt necessarily make them scant(p) cultures. Key questions to ask be how well leave alone the companies cultures mix with from each one other? If changes to either culture occur, what implications does this have on intersectionivity and efficiency?Technology is and has been a key part of business and forget continue to be. Technology increases productivity, efficiency, and in many ages pocket-sizeders the apostrophize of make products. When looking to acquire another company one must comp ar the technology of that company to its labor. How much will a company have to invest in a company to get the technology updated and perso nnel trained on those machines? How much would the company gain by implementing this new technology? Socio-cultural factors are a mindset of guests and they breeze a major role in whether or not a customer purchases a product and how much of it they will purchase.Grapefruit, for example, was a very popular item during the craze of the Hollywood Diet. Carbohydrates were in low demand when the Adkins Diet was trendy, and now its no transaturated fats that are becoming the next style of diet. unfluctuating food companies had to change their menus to fit some of these trends due to their popularity The lesson to take away from this is that a company ineluctably to look into current as well as future trends that occur before making the decisiveness to make an investment into an absorption.Brand equity is an essential part of acquiring a company. For example, a customer enters a pharmacy and sees both Tylenol and the generic brand of acetaminophen at the very(prenominal) price the c ustomer will most exchangeablely pick the Tylenol because it has proven itself to be a strong brand. The same can be said with companies in other industries. A company must research the customers perception of the products and service that the potentially acquired company offers in order to insure that they are making a good investment.Since the nature of business is to make profit, a shrewd to examination into the current profitability of the company being acquired as well as speculate future profitability is required. Its as well essential for a company to forecast the impacts that this merger will cause for their own company and regularize if the results are desirable before the merger takes place. Part II. Barriers to en approximatemoderate Sometimes a company will be able to enter the market but only for a short time however this still causes competition and causes a reduction in fares.Part of what keeps barriers high are that airlines that are already in business at that p lace have planes already purchased as well as partnerships with other companies established. This leads to a potential entrant having diseconomies of scale. The two major things that deter customers from choosing a rivalry are cost and bygone experience. These dont contribute much to switching costs so when a new competitor enters the diligence margins decrease even more. Since startup costs are so huge in the technical airline industry, the threat of potential entrants is rather low.Rivalry among existing firmshigh Since JetBlue has entered the global market in that respect are some(prenominal) more airlines worldwide that JetBlue has to manage with, as well as domestic and startup airlines to compete with. They must keep their prices/margins low not only to deter customers from other competitors but also to compete with close substitutes. There isnt a firm that controls a large portion of the market so in turn companies receive low return due to competitive pricing structu res. Finally at that place is very little differentiation in the airline industry.Services that JetBlue offers like free WiFi and XM radio are small things that help them differentiate their service for customers to buy. Threat of close substituteshigh There are several substitutes to air travel, these being things like a gondola or a train. When going overseas there sincerely isnt a good substitute unless you are going on a canvas which in my opinion is an entirely different plan for travel. Sometimes if a group of pile pauperization to travel to the same place they will carpool for a cheaper rate, but this is getting less popular than it erstwhile was.In summary the shorter the distance, the more likely an airline is going to lose to close substitutes like a car or train. Bargaining power of suppliershigh This is due to the fact that the suppliers are in an oligopoly. There isnt much competition in the supplier market so those companies can keep their margins rather high. I f a company decides to purchase a different brand of airliner then they would need to face training and concern costs associated with buying that new brand. Now there are things like beer and peanuts, uniforms and the like.The airline industry has potentially high bargain power against these suppliers but those items dont affect the profit margin like equipment does. Bargaining power of buyerslow/moderate The price of an airline ticket is set and doesnt really change except over time through competition. Buyers get to use technology like the profit to compare prices of different competitors which lowers prices however that only affects prices over time. Since there are many airlines to choose from as well as low switching costs buyers enjoy a moderate amount of bargaining power.However, with few exceptions like companies that use economies of scale to negotiate rates for you there is very little a buyer can do to bargain with an airline neighboring(a)ly. Overall competition in ai rline industry is very intense. There are several competitors in the airline industry, and since the industry is low growth competitors try to differentiate their service to get people to switch to them. In poor stinting times people look for lower cost alternatives and airfare is no differentpeople will look for lower cost core of transportation. airline businessrs also face an overall moderate bargaining power which limits their profit margins.Airline industryThis is considerably larger than some 620 countries, estimated similarly to the same size as Switzerland. (ATAG, 2012). It is orecast that by 2026, the industry will contribute $1 trillion to world GDP (ATAG, 2012). Despite the fact there is over 2000 airlines, each airline generally relies upon either one of the two-airline manufactures. These are Boeing or Airbus, both that are extremely blind drunk companies. Boeing & Airbus are extremely competitive against each other and often have court disputes against each other.Th e most recent dispute was dated in May 2011, where both companies claimed victory after the World change over Organisation overturned the ruling in which saw Airbus receive billions of Euros in illegal subsidies. BBC News, 2011). The US complained to the WTO as they thought the $18 billion subsidiary was deemed to cause serious prejudice to US interests (BBC News, 2011). Growth Rate The Airline industriousness woes are expected to continue, with humble winnings produced mainly by limiting capacity.Both Boeing & Airbus already have a backlog of orders due to carriers deferring their orders due to the poor growth in clientele and falling flight prices. (The Economist, 2012). early(a) factors that are damaging the threat of growth in the Airline industry are the threat of terrorism & increase in fuel prices. Are these factors putting people off? In 2009, there was an immediate decline in air travel by 30% (ehow) after the glide path on the match towers. The drastic decline maybe e xplained by the fact many feared there could be another terrorist attack in the nearby future.Rising fuel prices in 2012 are set to have an enormous impact on the industry and set to shrink profit margins awfully tight. The industrys global trade body nas warned that annual profits nave been cut by $500m (Financial Times). Due to the Increase in fuel prices, many airlines have decided to tolerate the A380 aircraft, hich carries roughly 500 people depending on the configuration. This has helped achieve economies of scale for many companies. Market Share The Airline Industry is incredibly competitive and diverse globally so it is difficult to summarise market function of companies.However, because of this reason returns are usually lower than expected. This can result in difficultly at times of economic recession. The supply in airline industry is very limited and dominated by Boeing & Airbus, which means there is very little aggressive competition. It is very unlikely to ee a suppl ier vertically integrated. This means it is highly unlikely that Boeing or Airbus would start offering flight services. The bargaining power of airline companies is amazingly very low.