Assignment on
Porter’s Five Forces Model analysis on Astra Airways (Air Astra)
Submitted to the Department of Business Administration (MBA Professional)
Bangladesh University of Professionals
Course Title- Strategic Management
Course Code- MGT 8503
Submitted By:
Farhan Nabib Tamal
ID: 23230333027
Batch 33, Sec: A
Submitted On: November, 2024
Porter's Five Forces Analysis on Astra Airways
(Air Astra)
1. Threat of New Entrants
High Capital Requirements: The airline industry requires substantial
capital investments in aircraft, infrastructure, and operational costs,
making it difficult for new entrants. So Air Astra faced a significant
challenge opening up a new airlines at first place.
Strict Regulations: The International Air Transport Authority (IATA)
poses strict regulation while flying domestic and International flights. Air
Astra faces stringent regulatory hurdles, including safety standards,
licensing, and route approvals, which can deter potential competitors.
Economies of Scale: Established airlines, like US Bangla Airlines, Biman
Bangladesh Airlines, benefit from economies of scale, making it
challenging for Air Astra to compete on price.
Brand Loyalty: People tends to rely more on established companies or
brands while flying. While Air Astra is a relatively new player,
established airlines have loyal customer bases, posing a challenge for them
2. Bargaining Power of Suppliers
Aircraft Manufacturers: Air Astra's bargaining power with aircraft
manufacturers like Boeing and Airbus is limited due to their dominance in
the market
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Fuel Suppliers: The airline industry is heavily reliant on fuel, and
fluctuations in fuel prices can significantly impact profitability. Air Astra's
bargaining power with fuel suppliers may be limited.
Airport Authorities: Airport authorities have considerable bargaining
power over airlines, particularly in terms of slot allocation and fees.
3. Bargaining Power of Buyers
Price Sensitivity: Passengers are often price-sensitive, especially for
domestic flights. This gives buyers some bargaining power. Promotional
offers and discounts makes it difficult for Air Astra to compete.
Limited Loyalty: Customer loyalty in the airline industry can be fickle, as
passengers may switch airlines based on price, convenience, and service
quality.
Corporate Travel: Corporate travelers, who often book in bulk, can have
some bargaining power, especially when negotiating corporate deals.
4. Threat of Substitute Products
Alternative Modes of Transport: For shorter distances, alternative
modes of transport like trains and buses can be substitutes for air travel.
Video Conferencing: Advancements in technology have made video
conferencing a viable alternative for business travel, particularly for
meetings and presentations.
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5. Competitive Rivalry
Intense Competition: The domestic airline industry in Bangladesh is
highly competitive, with players like Biman Bangladesh Airlines and US-
Bangla Airlines.
Price Wars: Airlines often engage in price wars to attract passengers,
leading to reduced profitability.
Capacity Constraints: Limited airport capacity can restrict the number of
flights, intensifying competition for slots.
Overall, Air Astra operates in a challenging environment with significant
competitive pressures. To succeed, the airline must focus on building a strong
brand, offering competitive pricing, and providing excellent customer service.
Additionally, strategic partnerships and alliances can help mitigate some of the
challenges posed by the five forces.
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