EXTERNAL FORCES

B) Porter’s Five Force Model

The analysis of the industry is described as a market evaluation process that built to provide a
company with an understanding of the involvement of a specific industry. The study of
corporation includes a summary of the global, political and business forces that influence the
way the industry evolves. Significant considerations may include the strength of supplier and
buyer, the condition of rivals and the possibility of new entrants to the market. Porter's 5
Forces model is a paradigm for evaluating the intensity of competitiveness in the growth of
market and company strategy. There are 5 types of economic powers, such as the bargaining
power of the buyer, the bargaining power of supplier, the threat substitution, the threat of new
entrant and rivalry among the existing competitors.

i. Threats of New Entrants – Low

In the sector in which Astro Malaysia Holdings operates, economic scale is relatively hard to
obtain. According to Astro's viewpoint, consumers' transition costs could be high due to their
long-term business position. This makes it possible for anyone producing big capabilities to
get a cost advantage. It also makes production costlier for future entrants. This makes it a
softer force to threaten prospective participants. Within the industry, the quality gap is large,
as the firms on the market sell differentiated products rather than standardised goods.
Differentiated items are also looked by the users. The supply should be distinguished from
what Astro actually has. This will provide a competitive advantage for the new entrant to
contend with Astro on an equal basis. Astro has continued to offer free decoders to its
customers over the past few years and has increased its channel content. The decoders were
available for a few thousand at their original launch and the number of channels was lower
than at present. Regulations within the industry require specific compliance and regulatory
standards to be followed before a business begins trading. Astro has made many
collaborations with some of the channel business, as well as reaching out to countries across
South East Asia. These are some of their strategic options for remaining competitive in the
coming years. This makes it difficult for new entrants to join the business to contest new
entrants, rendering it a fragile force.[ CITATION Ast12 \l 17417 ]
ii. Rivalry among the Existing Competitors – Low

The scale of competition among the current competitors is the greatest strength to be applied
to a specific corporation, according to the five forces model. In the case of Astro, they
actually do not have any direct rivals. Earlier in the late 1990s, an analogue version of cable
television known as Mega TV was launched by System Television Malaysia Berhad (owned
by the private TV3 channel at the time before it was taken over by Media Prima). Mega TV
only focused on viewers in the Klang Valley at the beginning of the stage. Mega TV was
inadequate to expand its channel content and, with the launch of ASTRO, agreed to end
operations in 2001. It opened the way for Astro to become the first subscription-based
satellite television provider in Malaysia. Astro has been able to monopolise the market for
satellite television as they have a deal with the Government of Malaysia to award them a
privileged licence until 2017. In technological terms, contrary to Mega TV, Astro is the only
producer of direct optical satellite television networks on an analogue basis. Astro has full
control over the Malaysian cable TV industry. The degree of distinction of the goods sold and
other considerations, such as the comparative advantage of a rival, play a role in a market that
is not monopolised by a certain player. As a result, competition is less where a company has a
strong market leader, which is Astro in this situation. Only after 2017 will the extent of the
strength of competitor competition be understood as their Astro supremacy expires.

iii. Bargaining Power of Buyer – Low

Buyers are the people or companies who in a corporation generate value. For various factors,
the purchasing power of purchasers would be stronger. The customer has an opportunity to
select other goods or services that are available in the market while there are few concern
buyers and many sellers in the industry. Through their competitive choices, players in the
market can compete with each other. Such factors that can often contribute to better
bargaining control of the buyer are the price sensitivity of the goods, the availability of a
substitute for the good or service, and the availability of items or services that are
standardised. As stated earlier, Astro has monopolized the cable television with specific
licence in Malaysia. The purchasing power of the consumers is thereby lower. Buyers may
not have the luxury of selecting another service provider. As no such service provider
operates at the time, any price rise has no effect on their revenue as consumers have no
choice to adjust. Astro has divided its networks into a certain bundle to meet the needs of a
client to solve this issue. In conclusion, the purchasers' bargaining power is weak, leaving the
buyers no alternative but to adhere to the terms and conditions of Astro.
iv. Bargaining Power of Supplier - High
In every sector, the position of suppliers is very critical in deciding if their goods or services
can be supplied at a given time. They contribute the inputs for manufacturing a good or
service. Suppliers' bargaining power is relatively high as there are just a few suppliers
supplying important inputs, for example, things that are not goods. The costs of going to
another supplier, which may be comparatively higher, are those factors that allow
manufacturers more negotiation leverage. In the case of Astro, the key vendors are the
companies responsible for supplying the decoders and satellite operators, but not the channel
material. By using their own enterprise as the businesses that provide this service market,
Astro has taken a strategic move. Satellites are part of their own scheme, and the decoder
suppliers are made by themselves.
v. Threats of Substitute Products or Services – Moderate

A substitution is exemplifying as a product or service that has identical characteristics in the

market to the existing product or service. The presence of replacement goods will decrease
the attractiveness and viability of the sector because they can restrict prices. The threat of
replacement goods depends on the ability of the purchasers to replace them, the
corresponding price and efficiency of replacements, and the expense of converting to
alternate. In the case of Astro, for example, the internet is the perfect replacement for cable
TV at the moment. With the advent of high-speed internet access together with Telekom
Malaysia's latest Unifi and Streamyx audiences can also watch the channels offered in Astro.
One of the features of this replacement is that even in case of heavy weather, customers will
watch, which would typically interrupt the transmission of the Astro. Because of its high cost
at present, the substitution may be able to please a certain community of citizens. Astro has
now established a few outlets under their own and this is actually generating sincerity to stick
with them from current customers. These networks serve numerous clients and, aside from
Astro, are unable to work outside. This is one of Astro's strategic benefits of being the core
player in the industry.[ CITATION Man13 \l 17417 ]

References
Astro Holdings Sdn. Bhd. (2012, September Sunday). Retrieved from Blogspot:
http://astroallasiabroadcast.blogspot.com/2012/09/astro-holdings-sdn.html

Manktelow. (2013). Mindtool. Retrieved from Emerland Works:

https://www.mindtools.com/pages/article/newTMC_08.htm