Porter’s products, requirements of capital refer according to cars

Porter’s Five Forces Framework Model analyses the competitive forces within the environment in which a company operates, to assess the potential for profitability in an industry. Porter consists of the threat of new entrants, the threat of substitute, buyer power, supplier power, and rivalry among existing competitors. The change in any forces normally requires firms to observe the market and make the decision in the overall change of industry information. Threat of New EntrantsProfitable industries that have high in returns will attract new firms to take involved. New competitors may force existing firms to be more efficient and to learn how to compete on new dimensions. The threat of new entrants is high when it is easy for new competitors to enter a market ad low when there are significant entry barriers to entering a market. These entry barriers make it difficult for new firms to enter an industry and often place them at a competitive disadvantage even when they are able to enter. The domestic cars that have produced in Malaysia are Proton and Perodua. This can seem that in the automobile industry, there have high barriers for new entrants to involve in. The potential factors that cause the high barriers of new entrants are economies of scale which is Perodua is able to produce automobiles in huge amount and gain low cost in producing company’s products and able to provide flexibility in pricing, differentiation of product which promote special products, requirements of capital refer according to cars industry which requires high capital capability to open and operate the business. Furthermore, automobiles business not only need high advanced technologies support daily manufactures activities, but also requires professional technical staff to manipulate those machines. Threat of Substitute ProductsA substitute product is a change that makes which used a different technology to solve the same economic needs. Threats of substitute products or services are high when they are many alternatives to a product or service and low when there are few alternatives for them to choose. The substitute product’s quality and performance are equal to or greater than the existing product while the selling price is lower. The factor that confronts is the number of substitute products available in the market, the intention of buyer substitute, relative price, and quality of substitute and buyer’s switching costs. Therefore, if there have a high threat of substitute products, there is higher the possibility for Perodua to have the loss in advantage and profit of the products. So, the threat of substitute products in automobile industry is low because the substitute product of vehicles that have is motorcycle, bus, van and so on. Although there have many types of transporting vehicles, cars still hardly to substitute by other vehicles since bus and van are more consider as public transport which means the time and distance are uncontrollable by single person. For motorcycle, it will affect by the weather when driving and less safety than cars. So nowadays, most of the people will buy car as their primary transportation because of the weather which may be sunny or rainy day and capacity of passenger that can bring compared to buying motorcycle which in rainy day, need to wear raincoat in order to prevent get wet in rain and more comfortable than choosing van and bus as their transport. Bargaining Power of BuyersThe bargaining power of buyers is the ability of buyers to affect the price they must pay for an item. Firms can take measures to reduce buyer power such as given discount by helps the company to find out which is firm’s loyal customers. Buyers’ power is high if buyers have many alternatives and it is low if they have few choices given. While in automotive industry, the bargaining power of buyers is moderately strong because large parts of buyers are the small individual buyers that buy vehicles. Such buyers are in a position to bargain for lower prices while every buyer can easily switch to a new brand in the fact of buyers are sensitive towards price and would switch to another brand that offers lower price which is Proton. And for the consumers who more concern about safety or speed, they might chose Volvo or BMW as their primary car brand. Thus, the Perodua need to focus on building customer loyalty through design, quality and by offering competitive prices.Bargaining Power of SuppliersThe bargaining power of suppliers is the supplier’s ability to affect the price they charged for supplies which including of raw materials, labour, and services. The supplier powers will increases when supplier’s products create high switching costs. Based on Automotive News in 2013, there have about 20 largest companies on the Automotive News list of the top 100 suppliers for 2012. So, there seem in automotive industry, there

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