Industry Dynamics

This chapter is based on Porter's Five Forces framework but focuses on employing a dynamic perspective to consider all potential strategic interactions within each force. The dynamic analysis brings into consideration strategic actions such as competitive action/response sequences. Strategic interaction analysis is supported by a set of management science tools like revenue management and system dynamics simulation. Five Forces determine the structure, and the attractiveness, of an industry: bargaining power of suppliers, bargaining power of buyers, threat of new entrants, degree of rivalry, and threat of substitutes embody the rules of competition. The chapter provides a suggested description of the determinants of the Five Forces for the airline industry. It focuses on integrating management science, analytics, and artificial intelligence (AI) for strategic management practice. Recommendation strategies have become a key activity, as well as academic research, in the operations of ecommerce that employ analytics and AI.