Competitive force is an element influencing the organisation’s contest inside the industry. The competitive force from both internally and externally contributes to performance (Liang et al., 2007).
Porter’s Five Forces recognized as the strategic management model and the industry environment factors in the aggressive environment. As shown in Figure 3, the centre block depicts the intensity of competition among industry competitors. The external forces of new entrants, the bargaining power of consumers and suppliers, and substitutes are proven as the threats acting on the industry.
An industry, selling prices can be forces up with high bargaining power if have lesser suppliers. On the other hand, purchase prices can be the force down with higher provider and bargaining power if have more customers. The new entries depend on the level of the existing industry’s difficulties. Rivalry can threat to existing industry as the market shares will decrease and product price will lead to decrease profits. Threat of substitute product able to make buying-selling contracts in advanced by comparing they end or selection and approved vendor list in terms of the production competence, price, quality, and transportability.
The purpose of developing a model of environmental threats is to aid
managers in evaluating these threats so they can come to be greater success
in growth strategies to neutralize them. This five features of corporate structure can threaten the ability of a company to both preserves or produce above-normal returns.
Risk Management features adaptable to the Five Forces Model and recognized as additional models which involve replacing intra-industry rivalries and competitive threats with the Internal organization, Industry, Information, Infrastructure and Influences. ???
The external environment is complex, opportunities and threats have to be identified for Industry and competitors which is no longer controllable and changeable. The internal environment is helpful, strengths and weaknesses have to be identified for Employees and customers which is controllable and changeable.
The SWOT process determine of internal analysis to identification of the key strategic issues between the internal strength and weaknesses versus external analysis for eternal opportunities and threats. After that evolution of options and selection of strategy follow by management have to choose the strategy with implementation.
SWOT allows management to determine where resources desire to be allocated to either shore up or scale back attributes to optimize program performance. Strengths give the business a competitive edge, Weakness gives the business barriers, Opportunities provide the chances to improve business performance and the external environment that has the potential to hurt a business which is harmful Threats and
have to monitor closely.
These analyses are influenced by the firm’s vision, mission and strategic actions. The firm must assess the company’s SWOT that exists externally in order to measure the business sustainability to planning for the future profit potential.