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External environment analysis

PESTE ANALYSIS for IRIS CO BHD


PESTA analysis is a strategy tools that used by the company to scan the external
macro-environment for better decision for company operation. It provide company an
overview of the whole situation on the business.

Political environment
The main concern of the political factors are the government intervention, entry
barriers, and tax or tariff structures and so on. The company need a good political
environment with stable political, government and legislation to growth. Malaysia is a multiparty democracy country with a stable politic environment and fair trade law and regulations
for the company to growth.
IRIS Corporation BHD had enjoyed the stability of political environment in Malaysia
due to Malaysia was a democratically-election coalition government. With the good politic
condition, Malaysia able to provide the healthy competition business environment with good
policies to Iris Corporation BHD.
Besides, Malaysia also charge the very low corporate tax rate which is just only 25%
compare to others country like Australia, India, Japan, Philippines and US who are charging
the corporate tax rate higher than 30%. In the others hand, Malaysia also established the
Kuala Lumpur Regional Centre for Arbitration in years 1978 for the purpose to provides
efficient and confidential system for the settlement of trade, commerce and investment
disputes within the region.
For Iris Corporation BHD which are the Malaysian company responsible to provide
software and documentary service to the government to produce the citizens Identity Card
(IC), Passport and others documentary, the government have set the regulations and law that
to only protect and benefit to Iris corporate BHD like entry barrier to its industry. But due to
the corruption issue getting more serious in the country, there will be some potential issue and
barriers will increase company cost and causing problems for company

Economics environment
The economics environment is the most important issue for macro-analysis because
the economics environment included the country citizens income status, purchase power,
unemployment rates, interest rate and so on which can directly decide the successful or
failure of the company strategy.
In Malaysia economics environment, the statistics shows that the Malaysias
economic growth are keep climbing to increase very stable which is average growth 7% per
year and 37% of Malaysias GDP and the country achieves a healthy current account surplus.
It shows that the Malaysia economics environment are very stable and suitable for the
company to increase their investment in the country. The location of Malaysia makes it
become the ideally location for the international trade.
The healthy economic environment in Malaysia provided IRIS corporate BHD a good
macro environment to growth and make the company strategy able to implement in smooth
and successful to achieve their target. It is because the economy policy and environment in
Malaysia are good enough to support IRIS corporation BHD strategy to ensure the successful
of the company.

Social analysis
Malaysia is an ethics diversity country for many races group like Malay, Chinese,
Indian and aboriginal. According to the statistics from Malaysian population and Housing
census department, Malaysia have 50.4% Malays, 26% Chinese, 11.8% of Indigenous, 7.7%
of Indians and 1.2% of other racial group to form the Malaysian population. Due to the multiracial of population, Malaysia also have a lot religious background like Islam, Buddha, and
Hindus and so on. In the Malaysia social cultural, the old generation still believed in their
traditional value but the younger generations are adopting with the western cultural rapidly.
Therefore the social environment are effecting the company strategy because the
future population group are changing their cultural. The IRIS Corporation BHD need to
change their strategy to provide their service like digital identity, business, farming and
environmental solutions to suit the younger generation habits. Besides, the company also
have to adapt the Malaysia mixture religions and cultural to ensure the company will adapt
their products and business practices.

Technology analysis
Compare to others country with high technology like Australia, US, UK and so on.
Malaysia still consider as a developing country and the technology level still not able to
compete with them in the international markets. Therefore, Malaysia government had invest
high volume of capital for research and development to enhance countrys technology level to
continuously compete in international market.
The IRIS Corporation BHD are one of the famous technology based company in
Malaysia which are the first electronic passport and national multi-application smart card.
The technology level of Malaysia also indirectly influence to the company because the need
to develop their product based on Malaysia current technology level to ensure that the
citizens of Malaysia able to use the product, and user friendly to the consumer.
Therefore, the E-passport which are invented by IRIS co BHD are adapt rapidly in
Malaysia because this technology provided convenient and secure to the Malaysian citizen
for facilitates safe, secure travel and prevent fraud which the traditional passport are not able
to do that.

Ecology analysis
According to the Ministry of Natural Resources and Environment, the business
activities in Malaysia are threaten the environment due to nearly two million hectares of
forest are lost between 1990s to 2010s and the depletion rate is faster than others Asian
countries. Therefore the ministry demanded the government to give up the nuclear power
option, halt the rare earth project, stop the use of incinerators and establish an efficient public
transportation system to reduce the pollution to the environment.
To encourage environmental awareness among the people, IRIS Corporation BHD
introduced the Autopot system which is an innovative farming solutions and environmental
friendly fertigation system designed to supply water and nutrient to the exact needs of a plant.
Besides, IRIS also designed a environmental pollution solution by invented the green gaspowered waste disposal system capable of environmental-friendly incineration of solid and
liquid waste.

Micheal Porters 5 force analysis


The porters 5 force are a very simple tools invented by Micheal Porter in purpose to
understand where power lies in a business situation by designing a framework to analyse
level of competition in the industry and business strategy development. It able to help the
company to understand their strength of the current competitive position. The Porters 5 force
included the supplier power, buyer power, competitive rivalry, threat of substitution and
threat of new entry. By the analysis, the company able to identify the behaviour factors of the
competition, manage the long-term strategy, analyse and access industry attractiveness
structured and understand the relationship between 5 dynamic forces and business
performances

Threat of new entrance


The company profit and market share will keep decrease if they are many new
entrants enter to the industry because of the new entrance are sharing the market share and
some of the consumer will switch brand to those new entrance.
IRIS Corporation BHD as the only manufacturer and service provider for Malaysia
government to provide the service of producing digital identity card and E-passport for
Malaysia citizens are consider as the monopoly company in the market. The government of
Malaysia already set the entry barrier to prevent others company to entry this market and
compete with IRIS Corporation BHD

Threat of substitution
This is a threat that the consumer able to find another company that providing the
similar product or services which are offer by the company. When the consumer able to do
this, they are able to switch to other company if the consumer feel unsatisfied with the
company product or services.
As the only manufactures in Malaysia which are developed the digital identity card
and Electronic passport for Malaysia citizens. The company are being protected under
Malaysia government because if there are another company in this industry to producing
Malaysia citizen identity card and passport, it will cause mass confusing and fraud, besides

the government also very hard to manage this citizens information storage. To prevent this
happen, Malaysia government have to make sure there are no others company that able to
produce the identity card and passport.

Intensity of competitive rivalry


The competitive rivalry refers to the number and capability of the competitors and
there are offering the same product and services with the company. When there are many
competitor in the market, the consumer will have higher bargain power because they can
switch to companys competitor if they didnt get good deal or dissatisfy with the company.
Besides, it also will lead to slow market growth if the market is intensity of rivalry due to
larger quantity of firm exist in the industry.
The IRIS Corporation BHD didnt facing this issue due to the government of
Malaysia only appointed only one single company to produce the citizens digital identity
card and passport. Therefore the company didnt facing any competitor in the industry and
become the only manufacturer of Malaysia citizens identity card and passport.

Bargain power of buyers


The bargain power of buyers refers to the ability of the consumer to influence the
company from the pricing, and quality aspects. The buyers bargain power will raise while
there are many alternative in the market. Therefore when the consumer are price sensitivity,
the company will have no choice to make the price low due to large number of customer
pressure.
The consumer of IRIS Corporation BHD which is the government and citizen in
Malaysia are have very low bargain power due to the IRIS was the inventor of the electronic
passport and national multi-application smart card in the world. Besides that, the Malaysia
government appointed IRIS as the only company to produce citizens IC and passport,
therefore the consumer have no other choice to make their identity card and the bargain
power is very low.

Bargain power of supplier


The supplier is the distribution channel which are providing the company raw
material, services or labour to ensure that the company able to produce their product or
services. While the supplier hold the unique resources that needed by the company, which
mean the bargain power of supplier is high and the supplier might be refuse to work with the
company if they didnt give good price to the supplier.
The supplier for IRIS Corporation BHD might be have high bargain power. It is
because the supplier of IRIS maybe hold the intel of the chip processing date and handling
the database. Besides, if IRIS want to switch another supplier, they might need to face the
hassle in approving a new reliable supplier by government. Last but not least, when the
company change supplier, they might need to make the previous version of chip to be
obsoleted, as to avoid data mining. Due to too many trouble will come to IRIS while they are
changing their supplier, therefore the supplier have very high bargain power toward them.

http://www.slideshare.net/aliceburavitskaya/pestle-analysis-on-malaysia
http://www.iris.com.my/index.html
http://www.itchybrainscentral.com/example-essays/ecology-impact-technology
http://www.quickmba.com/strategy/porter.shtml