Michael Porter Five Forces Model

Michael Porter Five Forces Model

1. Paypal

   • Supplier Power
     • 1) Limitless number of supplier
     • 2) A potential supplier for PayPal is a person who wants do an online money transfer.
     • 3) Suppliers wants protection for their items.
     • 4) The suppliers as a whole do not have much power unless they are dealing with high end items.
   • Competitive rivalry
     • 1) Faces competition in its marketplaces from both offline and online players.
     • 2) high competitors - more companies competing with its services.
     • 3) High rivals - Rivals located globally
   • Buyer Power
     • 1) High number of customer
     • 2) High size of order
     • 3) Differences between competitors – can refund money on damaged online purchase
   • Threat of new entry
     • 1) High time and cost entry
     • 2) Economic of sale – transaction through online,store and mobile devices
     • 3) Cost advantages – free, no annual memebership, no processing fees, no service charges
     • 4) Technology protection – secure payment ecosystem, credit card security 5)Barriers to entry – low
   • Threat of Subtitution
     • 1) Few substitute
     • 2) Low cost of change

2. Google

   • Threat of new entry
     • -Google is free
     • -provide a variety of tools include cloud computing to help business save money and help organization to be more productive
     • -CEO of google Larry Page describe google as the perfect search engine that understand exactly what you mean and give back exactly what you want.
     • -easy to be hacked and no barrier
   • Supplier power
     • -The bargaining power of suppliers is weak when there are many suppliers to choose from.
     • -external factors are the ones that contribute to the weak effect of suppliers on Google such as from high availability of supply and large population of suppliers
     • - High availability of supply
     • - Large population of suppliers
   • Competitive rivalry
     • -google offered their own product such as google maps,google scholar,google drive,google+ and so on.
     • -low,although they have opponed such as Yahoo! and Bing
     • - also offered Google business
     • - customer are loyal
     • - switching cost is very low
   • Buyer power
     • -Google strong as the number of customers strong effect on google as they rely on advertising to gain profit by customers clicked on the ads.
     • - Google is free in term of price sensitivity.
     • -Google has strong features that make it difference from other search engine like Google Instant, horizontal scrolling list of current movies and “answer boxes”.
   • Threat of substitution
     • - very low
     • - cost of change possibly high since google is very powerful company

3. AirAsia

   • Threat of New Entry
     • -Time and cost entry
     • ­– Low specialist knowledge
     • – Economic of sale – high
     • – Technology protection – requires plane and flying experiences
     • -Large cost advantages
     • - Low barriers to entry
   • Buyer Power
     • Low switching costs – costs of switching to other airlines is low Modern portion of expend buyer on airline
     • No significant product differentiation – Air Asia offers to providing package including flight tickets, accommodation and travel guide for buyer.
     • Market information will access by customers – Information is easy to access by customer only by click. Buyers have easy access to the information about airline services such as price and promotion.
     • Modern portion of expend buyer on airline – bargaining power of buyer will strong if customer look for cheaper price.
   • Product Power
     • Customer asy to switching to other airline – Flight path included more than one hundred cities and islands so it’s easily for the customer to look for alternative. Performance of competitors
     • Performance consists of the accuracy of takeoff time, aircraft performance and staff services.
     • Relative price – offers cheaper price to achieve profitability passenger loads.
   • Competitive Rivalry
     • Number of competitors - stay same in the long time.
     • Quality differences – large network to many destination and frequent promotion for the low ticket price.
     • Switching costs – low Customer loyalty – high eg: joint venture with Tune Money (issue loyalty point t customers)
     • Cost of leaving market –high (hard to leave the industry because the long term loan agreement)
   • Supplier Power
     • Supplier concentration in a few hands – Dew to a few suppliers in market
     • High switching cost – cost for employee training in operating the aircraft features is high.
     • Relative insignificant influence of buyer to supplier- Air Asia is a small portion of Airbus customer who contributes only 2% from Airbus total order.

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