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5 Porter Forces

5 Porter Forces

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Published by: Sujeong Elizabeth Joues on May 16, 2013
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5 porter forces(Tourism Industry

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Analysis tourism industry in Malaysia by 5 porter forces
During the last several decades’ tourism has emerged as one of the major industries in the world economy. Tourism revenues have grown to the third largest industry after oil and automobiles. Malaysia has some of the most attractive holiday destinations in the world. Tourism in Malaysia has contributed significantly to nation’s economy. The tourism industry in Malaysia is an important foreign exchange earner, contributing to economic growth, attracting investments and providing employment. As with other countries in the world, tourism industry can be claimed as an important sector for the Malaysian economy. Malaysian Tourism Industry Forecast to 2012”, international tourist arrivals in Malaysia will grow at a CAGR of around 8% during the forecast period (2011-2013) and tourism receipts from overseas tourists are expected to rise at a CAGR of around 8% during the same period, thereby, surpassing RM 70 Billion (over US$ 22.4 Billion) by 2013. Apart from the ASEAN countries, it is anticipated that tourist arrivals from China, India, and the Middle East will strongly grow during the forecast period (2011-2013). Malaysian tourism industry will continue to grow rapidly in coming years, on the back of increasing promotional activities by the government and growing reputation of the country as a shopping hub.

The competitive environment
The threat of entrants The power of suppliers The power of consumers The threat of substitutes Competitive rivalry

Porter’s Five Forces
1. The rivalry among established companies that is a function of three main factors: industry competitive structure, demand conditions, and the height of exit barriers in the industry. 2. The threat of new potential entrants that is a function of the height of barriers to entry that depend on three main sources: brand loyalty, absolute cost advantages, and economics of scale. 3. The pressure of substitute products that can limit the price a company can charge for its products and services. 4. The bargaining power of buyers. Buyers are able to force down prices or they may demand higher quality and better services which may increase a company’s operating costs. 5. The bargaining power of suppliers. Suppliers are able to force up the price of their products or reduce the quality of products supplied which may decrease a company’s overall profitability. MALAYSIA TOURISM INDUSTRY ANALYSIS The activities of Tourism Industry in Malaysia are directed towards improving the Malaysian tourism services. Owing to the good standards the Tourism industry in Malaysia maintains, it also appeals to many investors to invest in the Malaysian tourism industry. This inflicts a positive influence on the economy of Malaysia. Tourism industry in Malaysia provide ample scope for employment. There are several people who are recruited either in tourism industry directly or related industries. (http://www.economywatch.com/world-industries/tourism/malaysia.html)
http://books.google.com.my/books?id=6SAiXqi5xTIC&pg=PA120&lpg=PA120&dq=STEEP+analysis+t ourism+industry&source=bl&ots=4WUccfvD0I&sig=D0V3gcVrvqiwCQtzh_FTimfpWc&hl=en&sa=X&ei=cOVzT_yBBMzprQfR24nHDQ&ved=0CEQQ6AEwAw#v =onepage&q=STEEP%20analysis%20tourism%20industry&f=false

gov.The Malaysia tourist promotion board(MTPB) vision is to make the tourism industry a prime contributor to the socio-economic development of the nation.as Dr Ng said "2011 had been a tough year for the national tourism industry. Malaysia launched a worldwide marketing campaign called “Malaysia. floods . As Malaysian ambassador to the Philippines Datuk Seri Ibrahim said regarding to Malaysia tourism ranking and governors plans on tourism industry that "The Tourism Ministry should consider refining its promotion strategies as current campaigns mostly feature islands and beaches".9 it means that the industry is expanding year by year and the tourists from around the world whom intersted to see Malaysia are increasing.and got some awards in marketing and also became afamouse advertising brand for Malaysia tourist industry. which was affected by the tsunami in Japan. and aims to market Malaysia as a premier destination of excellence in the region. with 24. However there is threat of new entrants it means that the other eastern asia countries are preparing them selves to increase their tourist industry facilities.my/facts_figures) .it shows Malaysia tourist arrival in 2010 compare to 2009 in january-december .In 1999.tourism. Regarding to the star-news . Regarding to the MALAYSIA TOURIST ARRIVALS 2010 (http://www.Malaysia has been ranked ninth in the United Nations World Tourism Organisation‟s (UNWTO) list of 10 most visited countries.The total grand growth was 3. Truly Asia” which was largely successful in bringing in over 7.Over the years Malaysia tourism industry had been expanded .4 million tourists.6 million international tourist arrivals in 2010.

the government included tourism industry in the five year plan and regards it as a major part of the economy. The formation of the tourism department corporation in 1972 and placing it under the purview of the ministry of trade and industry for strategic planning and focus charted a new era in the history of the tourism industry. the European economic crisis and the opening of a casino in Singapore" She hoped that with the ministry's new plans for 2012. Besides. Online payment refers to money that is exchanged electronically. are pouring huge amount of investments to develop tourist industry. Our ongoing analysis found that.wasting time means wasting money. authorities. It was the dawn of a new beginning and both departments were giving the task to put Malaysia on the world tourist map. Typically. the Malaysian government is continuously making efforts to establish its tourist industry at the global front and has somehow succeeded after getting top position among the top 10 tourist destinations in the world. the industry would thrive again. One of the other suggestions that I have is that the hotel managment should plan to make some events specially for their Resort and diffrent offers they can provide to the people to intrest them to visit their resort as a tourist. this involves use of computer networks.also they have some packages for scuba diving.and funny stuff they have some problems for providing their services one of all is that they dont have online payment in the website. The old tourism department of 1959 was then upgraded into the tourism development corporation. Paku Besar Island. The country‟s tourism promotion board is also coming up with new promotional packages to attract tourist from various destinations. Kerengga Kecil Island.and on that dates they can make some events for diffrent moments and come up with celebrations.so in my view its better to add online payment in their website to book online and pay online. That was the same year Malaysia airlines was formed. Paku Kecil Island.Indonesia. the Malaysian economy remains relatively robust a with manufacturing and tourism taking the lead. Besides. (http://www. It is the second largest foreign exchange earner. PORTERS FIVE FORCES FOR MALAYSIAN TOURISM INDUSTRY the early 70 spelt the beginning of a new era. This Is in line with the government‟s objective to accelerate the domestic private sector and stimulate the services sectore to spearhead economic growth. Within concerning on above paragraph it shows that there is very high Competitive Rivalry within the industry competitors like Thailand which is gaining a lot of attraction among the world.asia/news/tourism/2524-malaysian-tourism-industry-set-to-flourish-onstrong-government-support) REDANG Redang Island together with its 8 neighboring islands (Lima Island. . after manufacturing.in Thailand.travelweekly. Today . at the end another suggest that i want to say here is the promotion pricing for diffrent dates. Ling Island. Since then.Singapore its casinos became a famous attracting for the visitors and also they developed lots of other tourism attractions it shows that they put their afford to gain their tourism industry and attract a lot of people around the world to visit their country. the internet and digital stored value systems. thus creating employment to thousand numbers of people in the country. Instead of all the entertaining packages and relaxation plans. the tourism industry has experienced a rapid growth and gained an importance in the Malaysian economy. Ekor Tebu Island. Being the main island of the Archipelago. this is one of the threats because in today life its all about not to waste time. Redang Beach resort is one of tthe famous resorts in Redang Island this resort got every thing you need to relax like the private beach they got there to provide their brilliant services. Pinang Island) are known as the Asia paradise in the South China Sea regions. Kerengga Besar Island.

Penang is a favorite spot among medical tourists. and substitute products) and 2 forces from „vertical‟ competition (bargaining power of supplier and buyer).com/wp-content/uploads/2009/07/porters-five-forces-model. According to Harvard professor Michael Porter.soopertutorials. As one of our research objectives is to determine the factors that allow Malaysia to gain more revenue from its tourism industry. Wind surfing. the structure of the analysis is according to each of the five forces of Porter‟s model. following are some of the destinations considered to be tourist attraction spots: Kuala Lumpur: The 88-storey PETRONAS Twin Towers is the main attraction in this capital city. Also. new entrants. This model is applicable to our research topic because we need to analyse all the five components in order for Malaysia to gain more revenue from its tourism industry.  Malacca: This place is famous from historic point of view due to the Portuguese colonization here from 1511 to 1641. canoeing. The 5 components inside this model which includes 3 forces from „horizontal‟ competition (rivals. the five industry forces determine an industry‟s overall attractiveness and potential for long-term profitability Tourism Destinations As per Malaysia‟s official tourism website. and parasailing are some of the activities that can be enjoyed here.jpg   In our research conducted.http://www. “Porter‟s 5 forces analysis”. Porter‟s 5 forces analysis was significant. Penang: It is a popular beach spot in Malaysia. lined up with a string of International-standard resorts. is another city well-known among tourists for medical procedures. Malacca. .

There is always a latent pressure for reaction and adjustment for existing players in this industry. BARGAINING POWER OF SUPPLIERS     The term 'suppliers' comprises all sources for inputs that are needed in order to provide goods or services. the Customers have low margins and are pricesensitive. The hotels customers are fragmented. More fixed cost and switching costs affects the business. and duty-free shopping make this place a haven for travelers.g. This category also relates to complementary products. the bargaining power of customers determines how much customers can impose pressure on margins and volumes The hotel industry is one of the most invested in its fixed assets. COMPETITIVE RIVALRYBETWEEN EXISTING PLAYERS This force describes the intensity of competition between existing players(companies) in an industry.margins.       The foreign hotel chains are tied up with Indian hotels to reduce the initial cost and using the latter’s brand name THREAT OF SUBSTITUTES A threat from substitutes exists if there are alternative products with lower prices of better performance parameters for the same purpose.     Brand loyalty of customers is dominating thesubstitutes. market shares. . In such a situation. The hotel chains are operating different services like Spas. The suppliers are providing better information about them to attract the customers . beautiful beaches. on profitability for every single company in the industry. new entrants could change major determinants of the market environment (e. Some unseasoned timings the hotels are offering discounts and incentives toreduce the bargaining power of buyers THREAT OF NEW ENTRANTS The competition in an industry will be the higher. the easier it is for other companies to enter this industry. etc. Boatels. so they have to reduce their bargaining power to attract the customers. So they are trying to recover their amount quickly. City Centers. prices. The price variation of same class hotel services from various brands is one of thereasons to choose a substitute. and hence. Langkawi beach is a well known place among tourists. High competitive pressure results in pressure on prices. Resorts. BARGAINING POWER OF CUSTOMERS Similarly. customer loyalty) at any time. Heritage hotels. They could potentially attract aignificant proportion of market volume and hence reduce the potential sales volume for existing players. There are no substitutes for spas and five star hotels. Kedah: A cluster of 99 islands with the best of many worlds. world-class infrastructure. . The hotel relationship with customer and costs also the reasons to switching tosubstitutes. If the hotel price changes are moderate. rich flora and fauna.Here the buyers are highly informed.

   The top competitors in hotel industry are having the same services like five star. Ekor Tebu Island. gleaming soft white sand and crystal clear water. First thing that the resort should be have the low cost and good quality for everything that tourists want.fresh air. slowly picking up in secondary cities. Also the manager of the resort should be knows there are many resorts and island in Malaysia. Nature is at its best here . in this case they should have something different compare with other resorts. Redang Island together with its 8 neighboring islands (Lima Island. it means this resort should have separate ferry to transport tourists from hotel to pier. Transportation is the one of the important to increase the quantity of tourists. The healthy competition among the all players is helping to increase the industrygrowth. Kerengga Besar Island. Paku Kecil Island. heritage hotels and palaces. Kerengga Kecil Island. Pinang Island) are known as the Asia paradise in the South China Sea regions. boatels and motels. Paku Besar Island. Being the main island of the Archipelago. Ling Island. Redang Island offers nature lovers an adventure holiday to get away and relax in the solitude and serene beauty of our tropical isles. .spas. Intense in metro cities.

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