Apply Porter’s Five Forces Model to evaluate the attractiveness of the Chinese fireworks industry. Remember to evaluate all the relevant criteria for each of the five forces and provide a low, medium,

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  1. Apply Porter’s Five Forces Model to evaluate the attractiveness of the Chinese fireworks industry. Remember to evaluate all the relevant criteria for each of the five forces and provide a low, medium, or high rating for each factor.
  2. Complete a PESTEL analysis. (both the PESTEL and Portor’s analysis should be done on the FIREWORKS INDUSTRY, NOT ON the CHINESE INDUSTRY)
  3. If you were Jerry Yu, would you recommend investing in a Liuyang fireworks factory? Why or Why not? Provide pros and cons list to support your alternatives.

Apply Porter’s Five Forces Model to evaluate the attractiveness of the Chinese fireworks industry. Remember to evaluate all the relevant criteria for each of the five forces and provide a low, medium,
Porter’s Five Forces Template Industry being analysed: Canadian Airline Industry Describe the level of rivalry among competitors. (High, Medium Low) Explain. Number of competitors – 5-10 leads to a medium level of rivalry Growth rate – High growth in cargo, current pandemic has caused a low growth rate for business flights and medium growth rate for pleasure travel. This leads would lead to a high rivalry for passenger and low for cargo. Fixed costs – high for cost of aircraft, maintenance and airport fees leads to high rivalry Differentiation among existing competitors – customer service and level comfortable between airlines is different among airlines. Cost and available destinations are different leads to medium rivalry Exit barriers – high barriers to leave due to presold tickets, leases at airports, and the high cost of aircraft. This leads to high rivalry Perishable – Airline seats are perishable. Once a plane leaves you can’t sell the seat. Leads to high rivalry Overall the rivalry among competitors is high rivalry. What is the threat of potential entrants? (High, Medium Low) Explain. Capital requirements – High cost to purchase aircraft, insurance leads to high barrier which is low threat for new entrants Access to distribution channels – Permission to fly are a high barrier which is a low threat for new entrants. Access to sell on internet is low barrier which is a high threat for new entrants. Differentiation among existing competitors – customer service and level comfortable between airlines is different among airlines. Cost and available destinations are different. This all leads to medium barrier and a medium threat Switching costs – No switching costs from one airline to another when booking a new flight. Loyalty cards may be a minor threat but overall low barrier so a high threat for new entrants. Overall the threat of new entrants is low-medium Describe the level of bargaining power held by each of supplier groups. Consider each supplier group separately. (High, Medium Low) Explain. Who are the suppliers? – List Suppliers and consider the following for each supplier. Number of suppliers Uniqueness of good/service Switching cost to change vendors Importance of good/service to industry Low threat of backwards or vertical integration by buyers Aircraft manufacturers – Suppliers have the power since there are only two manufacturers for airlines to choose from and it may be costly for an airline to switch vendors. However, larger airlines that purchase many planes may have higher bargaining power. Jet Fuel – Jet fuel is highly important but prices are primarily set by the world markets resulting in the suppliers have slightly more power. Food and Beverages – Many food and beverage vendors exist and the cost to an airline to switch is low unless there are contracts in place. The airlines have the power. Airports – Airports are necessary the operation for an airline and provide a unique service. This means that airports have the power and are they are a higher threat to the industry. Describe the level of bargaining power held by the buyers. Consider each buyer group separately. (High, Medium Low) Explain. Relatively few buyers – many buyers leads to low threat Goods/Services homogeneous (hard to distinguish between) – There are some differences in comfort and customer service leads to medium buyer power No or low cost switching costs – low switching leads to high buyer power Credible threat of backwards integration – Not applicable Overall – airlines have the power overall threat from the buyers is low-medium What are the potential substitute products and services? Is the threat from these each of substitutes high, medium, or low? Trains – low threat in most parts of Canada Car – high for short distance but low for long distance Boat – low threat Buses – low threat video conferencing – high for business travel – low for pleasure Overall Threat – low threat for long distance but high threat for short distance Strategic Planning
Apply Porter’s Five Forces Model to evaluate the attractiveness of the Chinese fireworks industry. Remember to evaluate all the relevant criteria for each of the five forces and provide a low, medium,
Airline Industry PESTEL Political/Legal COVID has resulted in flight cancellations, mandatory vaccination to board for some airlines and in some cases proof of being fully vaccinated. Insecurity or war factors that affect particular countries always have a negative impact on the airline industry. This is a major obstacle as airlines will start losing customers in areas that have high-security threats. Airlines have had to reroute flight paths due to no-fly zones or political instability in regions around the world. The airline industry operates in a highly regulated political environment where passengers are favored over the airlines. This is due to the fact that passenger safety is paramount. As example, is the Passenger Bill of Rights in Canada and similar regulations in other countries that make airlines more accountable and could increase operating costs. (Canadian Transportation Agency, 2019) There are rules and policies regarding how long and often pilots and work as well as allowable flight times. Unions can have a substantial impact on the operation of airlines, specifically pilot unions. While most airlines pay employees above minimum wage, increases in minimum wage could impact overall costs due to supplier costs increasing. Economical The inflation rate in April 2021 was 3.4% and has risen to 6.7% in March 2022. (Trading Economics, 2022). According to Trading Economics (2022) the inflation has increased substantially over the past year and will slowly begin to decrease over the next year to just over 2% in 2023. Recovering from the COVID pandemic, the unemployment rate has continued to decline and is nearing pre-pandemic rates. The rate in March 2022 was 5.3%. https://www150.statcan.gc.ca/n1/en/daily-quotidien/220408/dq220408a-eng.pdf?st=jOVOg0No Disposal income is on a decline by 1.3% in 2021 resulting in less income and higher expenditures for households. (REFERENCE NEEDED) Interest rates are rising in Canada which is increasing the borrowing rate for the airline industry and also causing higher costs for consumers. The population of Canada is XX and is growing at a rate of about XX. Actual population numbers for Canada should be included Exchange rate: the exchange rate from USD to CAD is XX. The low Canadian dollar makes Canada a preferred destination for foreigners but undesirable for Canadians to travel to some destinations. (should include actual exchange rates) Jet fuel prices have increased considerably in the past year. This is due to lower prices at the start of 2021. However, prices from two years ago indicate a lower increase. See below graph. (IATA, 2022) Social People continue to be wary and concerned about travelling due to the pandemic. There is a continued trend for people to travel with their pets. Celebrities and social media influencers continue to have an impact over younger generations purchasing decisions. Social media and the need to be constantly connected to the internet. The population in Canada is aging and airlines will need to adapt in order to accommodate this generation. A segment of the population cares less about comfort and more about affordably. Obesity is playing a changing factor; some airlines are charging extra for obese passengers. Millennials are more motivated to travel and spend money on experiences rather than material things Increasing cultural diversity results in new destinations becoming more desirable. Continued concern about the burning of fossil fuels may result in people looking for alternative modes of transportation. People in the Middle East and India might travel on their national airline to support the local economy, even though that might be more expensive. The flight attendants, different countries have different standards for hiring flight attendants, in America, this may not happen but in Asia, they focus on beautiful, slim young women only. Technological Changes in the way that people can purchase tickets, checking in with QR code and other services online are more convenient, it saves time and money. There are technological advancements with how airlines advertise, for example, sending emails and messages to remind passengers the promotions and the schedule of journey. Increase in cyber crime – The security of these data must be continuously enhanced to protect the information of passengers and prevent to be breached by hackers. Internet and social media allow customers to easily access information Continued advances in connectivity and entertainment have been introduced on airplanes. Artificial Intelligence can increase airline operations by improving crew management, revenue management, fuel efficiency optimization, fraud detection, and flight management. https://www.altexsoft.com/blog/engineering/ai-airlines/ Artificial Intelligence can also improve the customer experience through feedback analysis, message automation, and in-airport self-service. (REFERENCE NEEDED) Autonomous flight: For the flying experience, pilots have been always been an integral part. There are a number of aviation companies that have designed the unmanned aircraft. This technique can lead to cost-saving. Electric aircraft: Advancement and innovations in electric planes is continuing. Hyperloop technology may disrupt the airline industry. Environmental The industry is reliant on the use of fuel which is a decreasing natural resource. Aircraft creates noise and air pollution which can impact flight paths and times. Airline industry takes a lot of space which contributes to habitat destruction. Increases in extreme weather may cause departure and arrival delays Bibliography Canadian Transportation Agency. (2019, July 08). National tranportation system. Retrieved January 2022, from Canadian Transportation Agency: https://otc-cta.gc.ca/eng/air-passenger-protection-regulations-highlights IATA. (2022, January 14). Publications. Retrieved January 2022, from IATA: https://www.iata.org/en/publications/economics/fuel-monitor/ Trading Economics. (2022, January). Canada Inflation Rate. Retrieved January 2022, from Trading Economics: https://tradingeconomics.com/canada/inflation-cpi

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