My Fifth Class of Management Information System

Dear whoever read this,

It was a very cool material. We did really study about something that I have been waiting so far. Thing that I like about today's material is about understanding business environment specified in 5 forces. These 5 forces would be so critical to be considered by the businessman. Before we start the business, we have to think more and analyse all of the internal and external factor including these 5 factors. 

First is talking about the threat of new entry. This strength determines how easy (or difficult) to enter a particular industry. If the industry can get high profits with few obstacles then competitors will soon emerge. The more competing companies (competitors) compete in the same market, the more profit or profit will decrease. On the contrary, the higher the barriers to entry for newcomers, the better the position of our company engaged in the industry. 

Second is bargaining power of supplier. The strong bargaining power of suppliers allows suppliers to sell raw materials at high prices or sell low quality raw materials to buyers. Thus, the company's profits will be low because it requires high costs to buy high-quality raw materials. Conversely, the lower the bargaining power of suppliers, the higher the profits of our company.

The bargaining power of suppliers becomes high if only a few suppliers provide the desired raw materials while many buyers want to buy them, there are only a few substitute raw materials or suppliers monopolize existing raw materials.

Third is about bargaining power of buyers. This power assesses the bargaining power or strength of the offer from the buyer / consumer, the higher the bargaining power of the buyer in demanding lower prices or higher product quality, the lower the profit or profit that will be obtained by the producer company. Lower product prices mean lower income for the company. On the one hand, the Company requires high costs in producing high quality products. Conversely, the lower the bargaining power of buyers, the more profitable it is for our company.

The bargaining power of high buyers if there are many substitute products, many stocks are available but only a few buyers.

Fourth is threat of subtitutes. These obstacles or threats occur if the buyer / consumer gets a cheaper replacement product or a substitute product that has better quality with a low transfer fee. The fewer substitute products available on the market will further benefit our company.

Fifth is about rivalry among existing competitors. This strength is the main determinant, companies must compete aggressively to get a large market share. Our company will increasingly benefit if our company position is strong and the level of competition in the same market is low. Increasingly intense competition will occur if many competitors grab the same market share, low customer loyalty, products can be quickly replaced and many competitors have the same ability to face competition. 

That's all about what I have learnt in in this class. It was very interesting. I hope it can be understood as well and will be very useful for you. Here is one video that also discuss about 5 force in business environment. Have a nice day!