Individual Exercise - Essay Example

Chapter 2 – External Analysis: Identification of Industry Opportunities and Threats and nameCity, StateDate Individual Exercise:Question AThe Global commercial jet aircraft maker is a very competitive and dynamic market. Companies like Boeing Company and Airbus Industry face strong competition from international commercial airline makers who aim at increasing their market shares (Boeing, 1995). The Porter five forces model better analyzes the nature of competition in the global commercial aircraft maker.

The main factor that affects the competition in this market is the threat of new entrants in the industry. This threat is high on one hand, because of international commercial airline makers who aim at increasing their market share. On the other hand, not all investors are able to enter in this market because of the huge amounts of capital that is required in order to start up a company. It is for this reason that the threat of new entrants in this market is moderate. The bargaining power of customers also affects the nature of competition in this market.

Customers in this case are airlines who purchase the commercial jets. These companies have no substitute product and therefore have to buy aircraft. This makes the bargaining power of customers to be low. The level of competition is high in this market is because of new entries in the market who have decreased their prices significantly. This has in turn increases the pricing pressure on a company like Boeing. For instant, Boeing 737MAX-7 with a capacity of 130 passengers is listed at $85 million, while Bombardier’s largest C series model with the same capacity goes for $71 (Forbes, 2014).

Suppliers in this industry are seen to be having a low bargaining power because their customers only include aircraft manufacturers. These manufacturers are few as compared to the number of suppliers in the market. Question BFly Dubai is in its development phase. Flydubai is committed to making air travel affordable for its customers (Flydubai, 2014). This gives them the opportunity of attracting many customers and retaining them. The threat that this airline faces is high competition in this market from more established airlines that operate worldwide.

The fact that it is low cost brings out the threat of not being able to cater for the operating costs incurred by the company. Group ExerciseQuestion One The competitive structure of DRAM market is characterized by many competitors who have expanded their capacity into the production of semiconductor chips. For this reason, companies need to be innovative in order to succeed in this market. There is also no barrier to enter into this market which encourages many companies to enter this market.

This increases the competition. Due to the increase in supply of DRAM, customers have a higher bargaining power in this market and for this reason there is a reduction in the price of DRAM and companies compete for the few customers in the market.Question TwoThis industry is characterized by a boom and bust cycles. During the boom period, the market usually brings more returns to investors, there is an increase in jobs, and the economy grows (POLLOCK, 2011). During the bust period, people lose their jobs, investors lose money, and the economy shrinks.

In this scenario boom period is seen between 1993 and 1995 where the value of DRAMs increased from $ 13.6 billion to $55 billion. After the increase in profits from companies that entered into this market earlier, other companies entered into the industry. Apart from this, when the anticipated surge in Christmas sales of PCs failed, manufacturers found themselves holding too much inventory. They then cut down on their orders for DRAM. This decrease in the demand an increase in supply of DRAM led to a drastic drop in the sales volume and price.

This characterized the bust stage of the cycle.Question Three The best way to deal with the boom-and-bust nature of this industry is to always look out on market trends. This will help in increasing the level of innovation that will help the company be more competitive than other companies in the market. The other strategy is implementing the just in time method of production to avoid holding too much inventory at a time. Too much inventory is risky in this kind of industry.BibliographyBoeing, 1995. Boeing. [Online] Available at: http://www.boeing.com/boeing/commercial/products.

page[Accessed 11 03 2014].Fludubai, 2014. About Flydubai. [Online] Available at: http://www.flydubai.com/en/about-flydubai/[Accessed 13 03 2014].Forbes, 2014. New Entrants Pose A Challenge To Boeings Share Of The Global Commercial Airplane Market. [Online] Available at: http://www.forbes.com/sites/greatspeculations/2014/03/06/new-entrants-pose-a-challenge-to-boeings-share-of-the-global-commercial-airplane-market/[Accessed 13 03 2014].POLLOCK, A. J. (2011). Boom & bust: financial cycles and human prosperity.

Washington, D.C., AEI Press.