MIS Week 5

Hello, sir Roy and all of my friends!

Here comes the new blog! This time I will talk about Understanding Business Environment! 

I just got the ppt about the 5 forces for understanding business environment. So, let's talk about that! 

The 5 forces also known as the Porter's Five Forces. The Porter's 5 Forces was found by Michael Porter, The Porter's five forces is used for analyzing the industry. The 5 forces consists factors that affect its ability to serve its costumers and make a profit.  

The Porter 5 Forces

 

1. Competitive Rivalry 

This competitive rivalry shows the number and strength of the competitors. This analysis also show who are the competitors and the quality of the products and services. This also involve other differences as well as switching cost from one brand to another brand within 1 industry. 

When the competitive is high, companies should attract costumers with having lower price and high marketing campaigns. Furthermore, with having a lot of competitors suppliers and buyers can go elsewhere if not getting a good deal. On the other hand, when the competitive rivalry is low, the industry likely have strength and healthy profits. 

2. Buyer Power

This buyer power shows the number of costumers, size of costumer's order, differences from 1 brand to another competitors, the costumer's ability to substitute either the brand is not available, as well as cost of changing. Buyer power will increase as the number of costumers increase. 

3. Supplier Power 

Supplier power shows the number of supplier to the business. Not only the number, but the size of the supplier. What makes the supplier stay is the uniqueness of the service as the business will keep using the supplier. There will be also switching cost of supplier as business will have to change supplier if the supplier not available as it gonna impact the price of product either it make the product more expensive or cheaper? 

4. Threat of New Entry

The threat of new entry consist of the cost of entry as the business will have cost to entry the industry. To stay competitive, the business need to have specialist knowledge, as well as knowing the economic scale of the business. The business in the industry can be affected by the people's ability to enter the industry. A high technology protection and barriers will make the business stay at their position and gain advantage. 

5. Threat of Substitution

On the threat of substitution, there will be substitution performance, and cost of change. There will be possibilities on costumers substitute the company within the industry to try new things or for special occasion. An easier and cheaper substitution made, it can weaken your position and threaten the business profitability.

That is all from me. I really hope all of you can understand about the Porter 5 Forces. 

Thank You and see you on the next blog!