MM5012

Business Strategy and Enterprise

Modeling

Azwimar Putranusa
29114335
Anindya Prawita Sari
29114337
Syachriani Syam
29114384

HISTORY
In 2000 Cook founded Newlines Airways Ltd., a
UK-based start-up airline that aim at the
transatlantic business market.
11 September 2001, airline industry crisis
October 2002, co-founded Baboo SA, his attention
back to the airline industry
In July 2003, Swiss International Air Lines
announced drastic reduction in its network
26 October, Swiss was halting operations
19 September 2003 the DETEC granted the route
to Flybaboo

Five Forces Analysis of

the European Airlines Industry

Bargaining Power of Buyers: LOW

There is a large number of buyers relative to the number of firms in this
business
There is a large number of customers, each with relatively small purchase
The customer doesnt face any significant cost in switching suppliers
The buyer need a lot of important information with regard to using the
product
The products unique to some degree and they have accepted branding
The firms provide incentives to decision-makers on the buyer side

Five Forces Analysis of

the European Airlines Industry

Bargaining Power of Suppliers: MODERATE

Inputs (material, labor, service) in this industry are standard rather than
differentiated
Firms cant switch between suppliers quickly and easily
Suppliers would find it difficult to enter this business
There arent many current and potential suppliers in this industry
This business is important to the suppliers

Five Forces Analysis of

the European Airlines Industry

Threat of new entrants: LOW

Existing firm have cost and/or performance advantage in this industry

There arent proprietary products/services on offer in this industry
There are established brand identities in this industry
Customers dont incur significant costs in switching suppliers
There is a lot of capital needed to enter this industry
A new comer doesnt to the industry face difficulty in assessing distribution channels
Experience in this industry help firms to continually lower costs and/or improve
performance. In other words, there is a learning effect in this industry
There are any licenses, insurance and other qualifications required in this industry that
are difficult to obtain
A new comer can entering this industry expect strong retaliation from the existing
players

Five Forces Analysis of

the European Airlines Industry

Threat of substitutes: LOW

Available substitutes have performance limitations and/or high prices that
do not justify their use as mainline products.
Customers will incur costs in switching to substitutes.
There truly are real substitutes for the products available in this industry.
Customers are not likely to go for substitutes.

Five Forces Analysis of

the European Airlines Industry

Rivalry among existing players: HIGH

The industry is growing rapidly.

The industry have overcapacity at the moment.
The fixed costs of the business are not relatively low proportion of the total costs.
There are significant product differences and brand identities among the
competitors.
It would be hard to get out of this business because there are no long-term
commitments that bind players to the industry.
Customers would not incur high costs if the switched from one player to another.
Products on offer are not highly complex and require significant customer-producer
interaction.
Market shares in the industry are more-or-less equally distributed among
competitors.

Five Forces Analysis of

the European Airlines Industry

Favorable
Threats of new entrants

Bargaining power of buyers

Threats of substitutes

Bargaining power of suppliers

Intensity of rivalry among competitors

Moderate

Unfavorable

Flybaboo Strategic Innovation

Traditional

EasyJet

Flybaboo

VALUE
CUSTOMERS

Everyone, especially
class

People who pay from

their own pocket and
some who dont fly

Business travelers and

leisure customers.

VALUE
PROPOSITION

Flexible
Full Service
Worldwide Network
High prices

One way Fares

Refunds, if plane is
late
No seat choice low
price
No meals

Low volume routes

Low cost
Selling seats on a
first come first
serves

Flybaboo Strategic Innovation (cont.)

VALUE CHAIN

Traditional

EasyJet

Flybaboo

Purchasing

Integrated

Outsourced

Outsourced

Operating

Multiple planes
for mix of short
and long haul
travel
World wide
network

Short-haul
routes
Single type of
plane
Select
destinations

Segmented
customer
Varied meal
services
Frequent flyer
program

Treats all the

customers the
same
Focused

Travel agent
Bundling
possibilities

Marketing

Distribution

Direct
sales/internet

Point-to-point,
short haul
flights
Single type of
plane
No catering on
board
First come, first
serve
Low price for
early booking
Target tourist
and business
travelers

Direct sales,
internet (Flybaboo
website) or
telephone (call
centre)

Customer Segment & Value Target of Flybaboo

Sustainable Competitive Advantage

The upstart business must do :

Maintain the quality

Establish Brand Loyalty.
Focus
Continually Innovate
Offered competitive price
Location, information systems and distribution channel.
The product must unique (valuable, rare, imperfectly imitable)
Relations