SIMULATION REPORT

Airline Simulation Game - Rising Star Airline



Airline Simulation Game

Question 1

The sector which we have selected to operate is 'mid-range' airline. We decided to follow cost leadership strategies, along with less administration expenses and more focus on marketing as well as research and development. In order to make sound decision regarding which sector should we operate, we used effective strategies such as market segmentation, target market, and evaluation of sector based on SWOT analysis.

The market segmentation is a process through which we identified major attributes of our potential customers that can be used to develop distinct target market groups. This strategy holds importance as without a market segmentation base, advertising and sales would be like scattering breadcrumbs to a product, where most of efforts simply lost into context. Therefore, we reached our selected market in order to make our marketing budget less expensive, as it helped us in reaching our customers more efficiently. Using this strategy we better allocated our resources i.e. money as well as time and generated additional revenue.

In order to become more successful Porter's five forces are also used before entering into the new market, discussed below:

Substitute Threat

The services or products that are offered with the similar attributes that are offered by a service or product within the industry but through different process. For our business there are substitutes offer by railways that are already established in the industry.

Entry Threat

The airline industry which we have decided to enter has already included certain well established airline businesses that gives us some hard time, and as there is not much difficulties accept competition there is a threat of entry of more budget airlines and thus the bsuiness would be bit hard.

Buyer's Bargaining Power

Customers of our business are mid-range airline travellers. They are the essential tool for our business and holds bargaining powers within the airline industry.

Supplier's Bargaining Power

Suppliers are the one who supply the organisation what it needs to produce the product or service. Most of the organisation has many suppliers and if their power in market is high, suppliers can capture all their buyers own potential profit simply by rising their prices.

Extend of competition between competitors

There are organizations within the industry that are offering same service to the market we are serving, i.e. mid-range airline service, so they are rivalries/competitors. Therefore, a competition arises when other airlines take up the same sector which is mid-airline to the same destination. There are number of factors that affect the rivalry of competition in the market such as competitors balance, industry growth rate and high fixed cost.

Secondly, SWOT analysis strategy is used by us to evaluate the strength and weaknesses as well as opportunities and threats associated with the airline industry before entering into it. The SWOT analysis which we conducted is as follows:

Strengths

Key strength of the airline industry is its product itself i.e. air travel. Even in the times of downturns, the air travels overtime consistently grows, not only because of the increase ...