Table of Contents Threat of new entrants Threat of substitute products Bargaining power of buyers Bargaining power of suppliers Intensity of rivalry between competitors Internal Environmental Analysis Porter's Five Forces framework model analyzes the competitive forces within the In the environment in which a company operates, to assess the profitability potential of an industry, Porter understands the threat of new entrants, threat of substitution, buyer power, supplier power and rivalry among existing competitors. companies to observe the market and make the decision regarding the overall change in industry information.Say No to Plagiarism Get Custom Essay on “Why Violent Video Games Should Not Be Banned”?Get Original EssayThreat of new entrantsProfitable industries that have high returns will attract new businesses. New competitors can force existing businesses to be more efficient and learn to compete on new dimensions. The threat of new entrants is high when it is easy for new competitors to enter a market, and low when there are high entry barriers to entering a market. These entry barriers make it difficult for new companies to enter an industry and often place them at a competitive disadvantage even when they are able to enter. The national cars produced in Malaysia are Proton and Perodua. It may seem that in the automotive industry there are high barriers for new entrants. The potential factors that cause the high barriers of new entrants are the economies of scale that allow Perodua to produce automobiles in large quantities and win at low cost. in the production of the company's products and capable of offering pricing flexibility, product differentiation that favors special products, capital requirements refer to the automobile industry which requires high capital capacity to open and operate the business. Furthermore, the automobile sector not only needs advanced technologies to support daily manufacturing activities but also requires professional technical personnel to handle these machines. Threat of Substitute Products A product substitute is a change that requires the use of a different technology to solve the same economic needs. Threats from substitute products or services are high when there are many alternatives to a product or service, and low when there are few alternatives to choose from. The quality and performance of the substitute product are equal to or superior to those of the existing product while the selling price is lower. The factor to be faced is the number of substitute products available in the market, the buyer's intention to substitute them, the relative price and quality of the substitute products and the buyer's switching costs. Therefore, if there is a strong threat of substitute products, the risk of Perodua losing the advantage and profit of the products is higher. So, the threat of substitute products in the automobile industry is low because the substitute products of vehicles that have it are motorcycles, buses, vans, etc. Although there are many types of transport vehicles, cars can still hardly be replaced by other vehicles, because buses and vans are considered more as public transport,which means that time and distance are uncontrollable by a single person. For motorcycles, it will affect the weather when driving and less safety than cars. So nowadays most people will buy a car as their primary means of transportation due to the weather which can be sunny or rainy and the passenger capacity this can bring compared to buying a motorbike which, on rainy days, must wear a raincoat to avoid being carried. wet in the rain and more comfortable than choosing a van and bus as your means of transportation. Bargaining Power of Buyers Bargaining power of buyers is the ability of buyers to influence the price they must pay for an item. Businesses can take steps to reduce the purchasing power of the discount given by helping the business discover who its loyal customers are. Buyer power is high if they have many alternatives and is low if they have few choices. In the automobile industry, the bargaining power of buyers is moderately strong, because a large portion of buyers are small individual buyers who purchase vehicles. These buyers are able to negotiate lower prices, while each buyer can easily switch to a new brand as buyers are price sensitive and would switch to another brand offering lower prices, Proton. And for consumers more concerned about safety or speed, they can choose Volvo or BMW as their primary automobile brand. So, Peroduas should focus on building customer loyalty through design, quality and offering competitive prices. Bargaining Power of Suppliers Bargaining power of suppliers is the ability of the supplier to influence the price it charges for supplies, including raw materials, labor and services. The supplier's powers will increase when the supplier's products create high switching costs. According to Automotive News in 2013, there are about 20 largest companies on the Automotive News Top 100 Suppliers list for 2012. So, it seems that in the automotive industry there are many suppliers that companies can choose from to obtain the raw material. Therefore, the bargaining power of suppliers in this sector is considered low since Perodua could easily switch to other suppliers offering more benefits and the switching cost could be lower than other sectors. Intensity of rivalry among competitors Rivalry among existing competitors is high when competition is fierce in a market and low when competition is more complacent. For most industries, the intensity of competitive rivalry is the major decider of industry competitiveness. Therefore, it is important to understand the industry competitors to promote a product smoothly. In addition to this, a business needs to be aware of its competitor's marketing strategy and pricing because backlash will occur if any changes are made. Companies seek to differentiate their products in a way that customers value and in which the companies have a common competitive advantage. dimensions include price, after-sales service, innovation, etc. For example, most of the automobile industry will promote the similar price of the car, the similar service after the sale in order to defeat the competitors. Thus, the lower the rivalry between competitors, the higher the profits that companies can achieve. Analysis of the internal environment Value chain analysis is a strategic tool.