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Questions and Exercises 1.1 Porter’s Five Forces Applied to the Air Courier Industry. Apply Porter’s five...



Questions and Exercises
1.1 Porter’s Five Forces Applied to the Air Courier Industry. Apply Porter’s five forces to the air courier industry. Industry participants include such firms as FedEx, UPS, and DHL. (Hint: Access Gale’s Business & Company Resource Center, Global Business Browser, or Standard & Poor’s Industry Surveys to obtain the needed information.)

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Porters Five Forces: Air Courier Services

1) Competition from existing players: Competition is high. 90% of the market is dominated by big players like Fedex and UPS. Local couriers and delivery companies are highly dispersed like a red ocean scenario. They account for 1/3rd of the business in the sector.

2) Threat of new entrants: Threat from new entrants is low. Acquiring requisite infrastructure for the delivery services like human resources, last mile delivery trucks is not easy in a market which is already full with competitors.

3) Threat of substitutes: This threat is high. The physical parcels are getting disrupted with files being transferred digitally. Now e-signatures are providing a way to avoid physical papers/ parcels to be transferred.

4) Buyer Power: Buyer power is high. Courier services are a commodity now. Buyer can negotiate with various vendors before finalizing.

5) Supplier Power: Supplier power is low. In courier services, skills required are not niche. They require, trucks, personals, and computers to process, which all are commodity. Hence supplier as a whole can be switched quickly. Due to this, the supplier power is low.

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