The EU Airways - France - Essay Example

? TRANSPORT Lecturer: Address: ? Transport Part One of the traits of an entrepreneur is identifying a marketing opportunity. The EU airways provide a lucrative business market for both small and large-scale entrepreneurs. In a small-scale capacity, there are a number of factors to be considered in setting up a venture in the market. The tourism industry is one of the best resources when it comes to the passengers of the airline sector. In Europe, France operates the largest market share when it comes to tourism, with over 76 million tourists as international arrivals the huge number of tourists in the region create a lucrative business opportunity for investments. Overall, the air travel industry provides an opportunity, which is facilitated by more than tourism. It also incorporates economic development, global trade and international investments, thus being one of the best investment opportunities (Brennan, 2009, p. 212). As a small-scale entrepreneur, the number of tourists entering France provides any investor with the opportunity of establishing a low cost international or local flight service. In Europe, the connection between the UK and France presents a lucrative venture for business. The route that I choose as an investor is between the Heathrow, London and Charles De Gaulle, Paris airports. One of the strongest reasons why this choice makes economic sense to me is that the two stations represent the hubs of business in the regions (Doganis, 2001, p. 90). The two airports are located within two of the busiest cities in Europe. These cities have an intricate transportation network in which the passengers can get to the airports in a number of transportation choices. One of the most preferred choices of transport happen to be the train, closely followed by the cab. Transport between the centers and the airport has some merits as well as demerits. One of the challenges that the surface transport modes face is the case of jams. In both the UK and Paris, traffic congestion is a common occurrence, especially during the rush hours (Fleisher. and Bensoussan, 2007, p. 62). The jams are common in the railway stations as well as the motor ways. These characteristic is one that lowers the convenience of this mode of transport. This is however, it is an occurrence prominent in certain hours, but the intricate network is quite useful when there is little traffic on the road and rail networks. The car, either in a private or cab company capacity provides another choice of transport in the centers to the airports routes. As the preferred choice of transport, the car is one of the best choices in transportation, when convenience is involved, but this is dependent on the profile of the passenger. Where luggage is involved, the car might be the best operational choice, since it provides a better means of transport from the house to the terminal as opposed to public transportation. The train, though high speed faces an inconvenience in that it is public transport and is located at strategic points for a community (Frechtling, 2001, p. 31), in which the travellers have to walk or take a car to the service stations as well as from the terminals to the airports. With the train and buses being restricted to certain routes, the inconvenience lays mostly in the distance between the public terminals and the airport terminals, for they are not the same though close, in some instances. Another challenge with the public surface transport is the challenge introduced by the complexity of the transport network, especially for a nonlocal (Duncan, 2012, p. 134). Some of the competitors in the route chosen include the Eurostar. The train is one of the modes of transport between the two centers i.e. Paris and London. There are several favorable elements associated with the train such as speed, lower costs and the interactive nature of the travel. The car is another competitor to the mode of transport between the two terminals, since the intricate transport network provides a motorway that links the two terminals (Hollett, 1995. P. 91). The problem that is associated with the travel is the level of exhaustion and the time associated with the transport mode. There are several competitors in the airline industry, which include Easy Jet, Flybe, Aer Lingus, and Air France. This route comprises different market segments. The first part of the market, probably the most frequent users is the business executives. The two cities are major economic hubs in Europe and thus attract business-oriented minds all year long (Hollett and Duckworth, 1995, p. 290). Another common group of travellers is the tourists, mostly the young adults and couples. Paris is renowned for being one of the most romantic cities, which is a preference for honeymooners and as a result the fashion industry. Sports fans are also another common segment of the market that uses the terminals for travel (Johnson, Langley, Melin, and Whittington, 2007, p. 321). Common fixtures between teams in the European region experience many passengers through the terminals. There are periods in which the travels between the two terminals peak such as in the fashion week exhibition. The Heathrow terminal has more passengers traveling to France due to the cultural advantage associated with Paris (Fabre and Klose, 1992, p. 291). Part 2 All the competitors in the Heathrow, Charles De Gaulle route could analyze the market competitiveness by relying on Porter’s forces (Lundberg, Krishnamoorthy and Stavenga, 1995, p. 301). In the assessment, the entrepreneurs have to look into the industry competitors, power of new entrants, power of suppliers, power of buyers and power of substitutes. These forces are the composites of the Porter’s model in business environment analysis. The industry competitors’ force can be defined as the competition between the suppliers, in this case airline companies (Magretta, 2011, p. 31), in the industry that are competitors in the chosen route. The competitors force can be measured in the capacities of the investor’s number, size, operation costs, products and services as well as differentiation strategies. The power on new entrants is an element that equates to an increase in the number of competitors in an industry. In most cases, the entry of a new participant in the airline industry is a threat to the existing operators (Pettigrew, Whittington, Melin, Ruigrok, Sanchez-Runde and Van den Bosch, 2003, p. 201). In this case, the prospects by the new entrepreneur in the airline industry present a threat to the existing operators and this is what the entrepreneur in the Heathrow, London and Charles De Gaulle, Paris airports route. The power of suppliers in the Porter model is mostly valued as the bargaining power of the suppliers. The power of the suppliers can be measured in terms of the company reputation, coverage of the service provider (Porter, 1998, p. 171), the quality and quantity of products, the customer management and staff relations and the market bidding capacities. In the case of the entrepreneur, of the chosen route, he has to overcome entrant barriers which hinder progress for being a small time operator diminishes the bargaining power involved. The power of buyers is a representation of the power invested in the market. The buyer’s power can be a measure of buyer concentration versus that of firm concentration, buyer volume as well as information (Porter, 1998, p. 102). The power of buyers is a scenario where the market share by a given firm is based on choices revolving round the choices availed to the market, the costs incurred as well as the percentage influenced by a product or service. In this scenario, the entrepreneur has to analyze market prior to entering the market. The power of substitutes is the treat that new entrants in the market pose to the existing operators. The substitutes in the case may refer to the competitive price as well as performance that are asserted by the competition. In the operations, the threat of substitutes is normally a threat that is posed by services that achieve the same goal as the current market operators (Pucher, 1996, p. 219). In the case of the airlines, the power of substitutes can be because of introducing the fast train commuter service or the fast motorways. The aspect usually revolves around the introduction of new technology, products, trends and distribution changes. The new Heathrow, London and Charles De Gaulle, Paris route entrant presents a threat in substitute services by being a service provider proving a similar yet different service. Barriers to entry Entity into a new market is limited by several factors (Ritchie and Goeldner, 1994. P. 251). The intensity of these factors is different and has a varied effect on the investors’ decision-making systems on marketing and operational strategies. Some of the barriers to entry in the airline industry include: a) Economies of scale Economies of scale are a scenario where the cost of production per unit is used as a competition tool. In the case of the airline industry, the economies of scale are analyzed in the volume of passengers loyal to the services of a select firm (Scholes and Whittington, 2008, p. 207). In the economies of scale, the airline with the largest market share is the toughest competitor and barrier to the success of the new market entrant. This is a challenge to the new entrant, since they do not have the advantages that come with brands and reputation. The Heathrow, London and Charles De Gaulle, Paris route entrant has to apply advertising and marketing strategies to generate buzz that shall result to gaining a share of the market. b) Capital requirements of entry The cost of coming up with a new point of operation, or production is what that is regarded as the capital requirements of entry. In the airline industry, the capital cost involves licenses, which in this case is the international licensing. The entrepreneur has to acquire the licenses, taskforce as well as the operational equipment (Shaw, 2011, p. 126), which involves a fleet of planes and the staff to be involved in the success of the venture. The costs are a hindrance to starting up the business, since the entrepreneur has to secure funds to obtain various inputs. c) Access to supply or distribution channels By definition, a business takes the place of a node between the consumer and producer. In this concept, the access to provisions which include the expertise, fuel, servicing services, marketing and advertising tools is what that may affect the operations of the new entrant in the airline market. The incumbents usually have an advantage in this case, for having being operational for a period. The entrant has to establish ties associated with the supplies and distribution channels. d) Differentiation by ‘incumbents’ Differentiation is an aspect that creates a way by which variations of a product may be established. The differentiation by incumbents in the case of the airline industry represents the introductions to the airline market that differ to the existing brands and services. The existing operators have a different approach to the market and often involve themselves with differentiation in products and services, which create a competitive advantage in the market. By differentiation, entrants in the market provide a challenge and threat (Smith, lynch and knight, 2007, p. 284). e) Experience Experience in the market is an element that comes with the power obtained by the different inputs by any investor. Experience is an application where the differentiation, presence and cost effective inputs are used to gain an advantage in the market over the competitors. f) Expected retaliation from incumbents Any new entrant in the market is bound to meet some rivalry, and the measures they take to break into the market, but the measures often prompt the existing suppliers into acts of cementing their market share, which amount to expected retaliation from incumbents. g) Legislation or government action The aviation industry, as well as any other industry, is affected by the stand that is taken by authorities in regards to controlling how operations are run. The first issue in the operations is the entrants conduct is the acquisition of a license, international (Whittington and Scholes, 2010, p. 291). The entrant has to pass stringent measures set by the government to acquire the okay to work in the industry and operate within a given region. The incumbent usually have an advantage over the entrants for they have to adjust to new reforms, which is a much cheaper operation. Conclusion The Heathrow, London and Charles De Gaulle, Paris route venture, faces a lot of challenges, some of which are considerable challenges. The market provides an opportunity for the entrepreneur and there is a huge degree of success involved if the proper marketing strategies are used, especially with the increasing challenges to the world economy. References BRENNAN, K. (2009) A Guide to the Business Analysis Body of Knowledge 2nd ed. New York: International Institute of Business Analysis. DOGANIS, R. (2001) Airline Business in the 21st Century 1st ed. London: Routledge. DUNCAN, R. (2012) The New Depression: The Breakdown of the Paper Money Economy 1st ed. New York: Wiley. FABRE, F. and KLOSE, A. 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SMITH, R., LYNCH, D. and KNIGHT, B.A. (2007) Learning Management: Transitioning Teachers for National and International Change. Frenches Forest: Pearson Education. WHITTINGTON, G. and SCHOLES, K. (2010) Exploring Strategy 9th ed. London: Pearson.   Appendices Prefered Airline route Eurostar Route Read More