An Analytical Examination Using Porter’s Diamond

Austrian Airlines’ long history of operating as an Austrian owned company has finally come to an end after their poor performance in 2008. This paper analyses the means by which Austrian Airlines has been able to compete globally for so many years in the competitive airlines industry and proposes reasons for their past success. The four components of Michael Porter’s Diamond of National Advantage were used to analyze the company, in combination, with two other variables that have an effect on all four of the components, the government and chance. The main four components of Porter’s framework include firm strategy, structure, and rivalry; demand conditions; related and supporting industries; and factor conditions which together work as a framework to determine the factors that allow Austrian Airlines to have a national comparative advantage. The information used in the paper was gathered from the company’s annual report, various online sources that are not affiliated with Austrian Airlines, Michael Porters book “The Competitive Advantage of Nations” and primary data from a customer satisfaction survey. From this analysis, it is evident that Austrian Airlines derives its ability to compete from many different sources such as the country’s geographical location and the supporting industries located around their main airport hub in Vienna. It will become more apparent in the coming year, when more information is published, as to why the company’s performance in 2009 was so poor which forced the privatization of the company.