The Five Forces Model An industry is defined as a group of firms producing or supplying related products or services and the

complementary firms that support them such as suppliers and distributors. An industry analysis is defined as market assessment tool designed to provide a business with an idea of the complexity of a particular industry. Industry analysis involves reviewing the economic, political and market factors that influence the way the industry develops. Major factors can include the power wielded by suppliers and buyers, the condition of competitors, and the likelihood of new market entrants. A helpful, widely used framework for classifying and analyzing these factors is the one developed by Michael Porter of Harvard Business School. Porters Five Forces model framework views the protability of an industry. With the analysis of the model, a firm or an organization can be able to know whether their competitive advantages works and their company strength to overcome certain forces in the model. These five competitive forces are the threat of entry of new competitors (new entrants), the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers and the degree of rivalry between existing competitors. Astro five force analysis and their strategic options. The degree of rivalry between existing competitors According to the five forces Model, the degree of rivalry between the existing competitors is strongest force to apply to a particular industry. In the case of Astro, currently there are no direct competitors to them. Earlier in the late 1990s, Sistem Televisyen Malaysia Berhad (which owns the private channel TV3 at that time, before being taken over by Media Prima) launched an analogue version of cable television known as Mega TV. Mega TV concentrated only with the audiences in the Klang valley in the initial stage. Mega TV was unable to increase its channel content and with the introduction of ASTRO, it decided to cease operations on 2001. This paved way to make Astro the only satellite television subscriptionbased service in Malaysia. Astro is able to monopolize the satellite television market since they have an agreement with the government of Malaysia that gives them an exclusive license until 2017. In technical terms Astro is the only provider of direct satellite television channel in digital form compared to Mega TV which was on analogue means. Astro has the complete control of

the cable tv industry in Malaysia. In an industry which is not monopolized by a certain player, the degree of differentiation of products offered and other factors such as the competitive advantage of the competitor plays its factor. As a conclusion rivalry is less when an industry has a clear market leader, which in this case is Astro. The extent of intensity of competitor rivalry will be only known after 2017 when their monopoly of the Astro ends. The bargaining power of buyers Buyers are the people or organisations who create demand in an industry. The bargaining power of buyers will be greater due to several reasons. When there are few dominant buyers and many sellers in the industry, the buyer has an option to choose other products or services that are present in the market. Players in the industry will compete with each other with their strategic options. Other factors that can also contribute the bargaining power of the buyer to be greater is the price sensitivity of the products, availability of a substitute for the product or the service and the availability of products or services which are standardized. As mentioned earlier Astro has the monopoly of the cable tv license in Malaysia. This makes the bargaining power of the buyers to be weaker. Buyers have no option to choose a different service provider. Any price increase has no effect to their sales as customers have no option to the change as there is no any other service provider at the moment. To cater to this problem Astro has divided its channels to a certain packages to suit according to a customers needs. In conclusion the buyers bargaining power is weak leaving the buyers no options but to adhere to terms and conditions setup by Astro.

The bargaining power of suppliers In any industry the role of suppliers are very important in determining that their product or services can be delivered at a given time. They provide the inputs for a product or service to be produced. The bargaining power of suppliers is relatively strong when there are only a few suppliers that provide essential inputs, items which are not commodities for example. Other factors that give the suppliers a higher bargaining power is the cost of switching to another supplier that might be relatively higher. In the case of Astro, the main suppliers are the firms that responsible that to manufacture the decoders and the satellite operators but not the content of the channel. Astro has engaged a strategic step by using their own company as the firms that are

suppliers to this service industry. The satellites are a part of their own system plus the manufactures of the decoders are produced by themselves. The threat of entry of new entrants Industries that tend to be profitable are attractive to companies outside the industry because they see the possibility of entering the industry and to make profit. New entrants may take the form of either startup companies going into the business for the first time or existing companies that decide to grow by existing markets. New entrants to an industry can raise the level of competition, thereby reducing its attractiveness which will lower the profitability as whole. The threat of new entrants largely depends on the barriers to entry. High entry barriers exist in some industries whereas other industries are very easy to enter. Key barriers to entry include capital investment, economics of scale and customer switching costs to name a few. Looking at Astros perspective, customers switching cost might be high due to their presence in the market for a long time. If their monopoly is to end at any time, the new entrant company should be able to provide all the necessary items and services at a free cost if they were to really compete with Astro. The service should be differentiated compared to what Astro is having now. This will create a competitive advantage for the new entry company to compete on par with Astro. Over the past few years, Astro has started to provide free decoders and has increased its content of channels to its customers. During their initially launch, the decoders were sold at a few thousands and the number of channels were lower compared to now. This economies of scale which Astro enjoys currently is something that a new entry is had to compete with. Large capitals with larger fixed costs will deter certain companies to compete with Astro even after they have finished their control of cable tv. Astro has made several partnerships with some of the channel company plus they have also branched out to countries around South East Asia. This is a few of their strategic options taken by them to remain competitive in the coming years The threat of substitutes Substitute is defined as a product or service that has the similar attributes to current product or service in the market. The presence of substitute products can lower industry attractiveness and profitability because they will limit price levels. The threat of substitute products depends on the buyers' willingness to substitute, the relative price and performance of

substitutes and the costs of switching to substitutes. For example in Astros case, the internet is the best substitute to cable tv at this moment. The introduction of high speed internet connection plus with the new launched Unifi by Telekom Malayisa, the viewers are able to watch the channels which are offered in Astro as well. One of the features of this substitute is that customers can able to watch even in if there a heavy rain, which normally will disrupt the Astros transmission. The substitute might be able to satisfy a certain group of people due to its high cost currently. Astro have already produced a few channels under their own and this is actually attracts loyalty from existing customers to remain with them. These channels serve different customers and are not able outside apart from Astro. This is one of the competitive advantages of Astro to remain as the key player in the industry. Conclusion Five force analysis is used to understand how an industry compares to another. The five forces model acknowledges the roles that entrant, substitutes, buyers, suppliers and industry players rivalry in this equation. In the process of considering the five forces, every effort should be made to evaluate the extent to which each force influences how the industry is either more or less profitable for the set of competitors. The five force analysis on the cable television industry in Malaysia by looking at Astro shows that it is benefiting a lot due to the policies implemented by the government. The monopoly of the market has created them as the market leaders in this particular industry. Without any competition from any immediate rivals and also no threat of bargaining power from the supplier and also buyers, Astro is able to achieve maximum share of profitability. It is also continuously trying to introduce new services such as the Astro mobile for its customers. Competition might come from the substitutes due to their better attributes with respects to Astro. The setback with a monopolized industry it will not tell how an industry strategic options is compared to another. The same strategy cannot be used if the market is open after a certain period of time.