The Effect of the Five Forces of Industry Competition on Saudi Arabian Airlines
This analysis provides a no exhaustive list of potential influences of the environment on the organization. Each of the forces is categorized by a particular macro-level external influence, which directly impacts strategic direction at Saudi Arabian Airlines. The political environment can have a significant influence on businesses as well as affect consumer confidence and business spending. The political environment is one of the major advantages to Saudi Arabian Airlines, as the majority of its operations are contained within Saudi Arabia. This policy was known as “two airline policy” valid for three years and was directed at benefiting both Saudi carriers Sama Airlines and Nas Airlines. The new policy ruled that the two major Saudi airlines will not compete on any international route and they both had to have separate routes-Middle Eastern deregulation of the airline businesses from 2007. set up a number of low-cost airlines offering no-frills services. This deregulation enabled Saudi Arabian Airlines to open new routes to continental Saudi Arabia.Increasing oil prices inflated the costs of fuel and impacted profit margins-At the same time people in Saudi Arabia are willing to travel more for lower price and this was option for low-budget airlines like Saudi Arabian Airlines.Middle Eastern deleted duty-free on intra- Middle Eastern countries, and this new taxation policy affected Saudi Arabian Airlines in loss of revenue, increased landing charges and increased the number of flight attendants.The social and cultural influences of business vary from country to country. Social-cultural factors in Saudi Arabian Airlines case include:-Increasing of the people’s mobility in Saudi Arabia, where good transportation is essential for every Saudi Arabian citizen and it was a great opportunity for Saudi Arabian Airlines to expand its business.The five forces were identified by Michael Porter as the industry Five-Force model.