How did the airlines solve this problem?

Businesses and Market Competition

Assignment 1

Article link: https://bb.wpunj.edu/bbcswebdav/pid-2538861-dt-content-rid-18725332_1/courses/20204041860/Porter%202008.pdf (The Five Competitive Forces that Shapes Strategy by Michael E. Porter)

In defending his famous 5-Forces model, Michael Porter had suggested that the airline industry was an example of a “bad” industry, where the five forces were against incumbents. http://www.youtube.com/watch?v=mYF2_FBCvXw. Also, in his 2008 HBR article (attached), he has a chart on page 83 where airlines are at the bottom of the list (average ROIC 1992-2006 was 5.9%, the lowest, compared to >40% for security brokers, and >37% for soft drinks and packaged software).

However, in 2012, we heard a different story, as we can see in this NYT report

Now the incumbents were sitting pretty.

Please write a 550-words essay with an original title where I would like you to answer the following three questions:

1. Did circumstances change since 2008, or was Porter’s argument flawed to begin with?
2. Are there any technology issues that need to be addressed? (Remember, the internet was especially unkind to the airlines, when passengers used their enhanced access to information to bargain down prices. How did the airlines solve this problem? You can argue that technology is incidental here (regulation, fuel prices and other issues might be more explanatory), but do offer an assessment on the role of technology in this industry.
3. What did you learn from this article and what is your opinion?

MUST USE THESE LINK:

https://bb.wpunj.edu/bbcswebdav/pid-2538861-dt-content-rid-18725332_1/courses/20204041860/Porter%202008.pdf