In every organization there are many factors that can affect it environment. There is two types of factors and they are external factors and internal factors. The internal factors mean that there are factors that is within the organization that have an impact on it operation such as the ethical beliefs, mission and objectives, organization structure, the top management culture and style functioning, human resources quality, labour unions, and the capabilities of physical resources and technological. The external factors mean that all the outside factors that have impact on the organization environment such as owners, customers, suppliers, competitors, employees and employee unions, demographics, and Values. There are many things that the organization may face such as opportunities and threats. Some of the opportunities that the organization may face are the change in market and they are customer change in lifestyle, advances and change in technology, and new production methods, etc. some of the threat that the organization may face are competitors reducing prices, supply costs increase, new technology, government regulations, economic slumps or recessions, demographics alter, and changes in consumer behavior.
In any business there are a very powerful tool it called Five Competitive Forces. The five competitive forces are to determine the profitability, and the market or market segment attractiveness. The Porter Five Forces is a powerful tool that is created in 1979 by professor in the Harvard Business School his name is Micheal Porter, to help analyze the attractiveness of the industry’s and profitability likely. The five competitive forces identified the five forces that can affect the competitive environment and make up for it, which can erode the profitability. The five competitive forces are competitive rivalry, supplier power, buyer power, threat of substitution, and threat of new entry. The competitive rivalry is to examines the marketplace how it is intense the competition currently is, which is to know and look at the number of the competitors and their strength. The competitive rivalry is high when there are a few businesses that is selling equally and the same products or services, when the industry is growing and the customers easily can switch to some competitors offering for less cost. When competitive rivalry is high, the advertising and the war of prices can ensue, and that mean it can hurt the bottom line of the business’s. For example, Zain company faced stumble relating to a fully saturated market, Zain company has several competitors such as Ooredoo, Viva, and Some customers shift to other competitors. The second porter’s five forces are supplier power and its help to show how is the price is increase because of the suppliers and that have an impact on the profit. For example, Zain company deals with some bigger numbers of the suppliers for software, servers, equipment, cables … etc. The third porter’s five forces are buyer power and it deals with the customers’ ability to drive the prices down. The company may get affected by how many buyer and customers it has, how each customer is significant, and how much it will cost the customers to change form company to another. When the client base is small and powerful, the more power it will holds. For example, Zain company has basic services that any telecommunication company provide and almost the same such as messages, voice and data. And adding to that, the cost switching is usually low. The forth porter’s five forces is threat of substitution and its mean that the substitutes of the competitor that can be used in place of the company products or services that may pose a threat. If some customers rely on the providing a tool or service from the company that can be substituted with another tool
or service or by performing the task manually, and if this substitution that the customers want is it fairly easy and of low cost, a company’s power can be weakened. For example, Zain company has many multiple players in the telecommunication sector such as the cable companies, the TV and satellite operators, and the web developers. These players can create substitute services that especially for the non- traditional services. The fifth and last of the porter’s five forces is the new entrants and it mean the power of the company is affected by new entrant’s force into the market. The less time and money the competitor costs to enter the company’s market and be an effective competitor, the more the position of the company may be significantly weakened. The industry with entry barrier that is very strong is an attractive companies feature would prefer to operate in a space with fewer competitors. For example, Zain company and any Telecommunication industry is very expensive because of the need of the high capital investment in networks, the cables, the servers, the software or even the license fees which vary between countries. In addition to that, for upgrading and maintaining those equipment and they are high operational expense. There is an effect on the each of the porter’s five forces by the internet and digital technologies. For the first of the porter’s five forces is competitive rivalry, the internet and digital technologies has an impact on the competitive rivalry by new technology for the substitute services is prompting a raft. All the competitors must lower prices and more exciting services to lure the customers, because nearly everyone pays for the phone services already. If the company lower the prices this will drive the company profitability down. The low profit, the telecom industry experience from high exit barriers, mainly due to its specialized equipment. The systems of the networks and billing cannot be used for much else, and their swift obsolescence makes liquidation pretty difficult. Internets can make it very easy for the rivals to compete on price and the new competitors to enter the market. Because the information is obtainable for everyone. For the second of the porter’s five forces is supplier power, the equipment suppliers of the telecom consider bargaining power over telecom operators. The without the high-tech broadband switching equipment, fiber-optic cables, mobile handsets and billing software, telecom operators there will be not able to do the transmitting voice and data from place to place. For the third of the porter’s five forces is buyer power. With the increased the telecom products and services choice, the bargaining power of buyers is rising. While switching costs are comparatively low for residential telecom customers, for the larger business customers they can get higher, particularly the ones that rely more on customized products and services. For the fourth of the porter’s five forces is threat of substitution. The non-traditional telecom industries products and services pose serious substitution threats. The digital services that fling into physical products and could advance automation technologies at home and industrial internet to basic products. The last and fifth of porter’s five forces is the threat of new entry. The biggest barrier to entry is the finance access for the capital-intensive telecom industry. Telecom license ownership can represent a huge barrier to entry. New technologies make the entry of the new competitors difficult.
In the five forces there, a factor called threat of new entrants and its mean to help analyzes how probable it is for a new entrant or entrants to enter the environment of the competitive in a company operates within. The barriers to entry is the terms within the competitive environment that can affect the decision for the company to enter into a market or not. It may be easy or difficult for a business to enter into the market and establish their presence depends on the barriers that the company may face. There is some threat for the entry to new entrants in small scale entrepreneurship in Kuwait. There are many types of barriers to entry
such as those created by the government, by the existing companies, by the business nature and by the existing industry structure. There are many type of the barriers for new entrants such as economies of scale, a differentiated product, high capital costs, and other cost advantages. For the first barriers for new entrants called economies of scale and its mean the companies will be able to avail cost advantages when manufacturing or selling at a large scale because per unit costs of the product fall. For example, Zain company the economies of scale are the cost advantages that the company obtains due to size, this specific factor will lead the costs to decrease. For the second barriers for new entrants called a differentiated product and its mean if the product being sold by company that exist or companies is highly differentiated or enjoys loyalty to the strong brand, and this can act as a strong barrier to entry. For example, Zain company achieve competitive differentiation by customers profiling and implementing customized retention initiatives. For the third barriers for new entrants called high capital costs and its mean if the industry requires investments with huge capital at the onset, this will be a barrier to entry for many of entrant’s potential. For example, Zain company shareholder exist like 99 percent to subscribed the offer, making it the largest capital raising in history of Kuwait. For the third barriers for new entrants called Other Cost Advantages and its mean access to the best suppliers, understanding and knowledge the existing materials and their quality, possession of important and necessary patents, and proprietary information and technological knowledge. For example, Zain company the team of the operational management are dealing with costly and unavoidable socio-economic challenges across several key markets and are laying the foundations to take full advantage of improving conditions. The new entry barriers have some ways to overcome them such as minimum viable product at start, consumer feedback responding, use pricing model disruptive, have different objectives, produce wonderful content and products, existing brand leveraging to enter a new market, marketing Viral to cut the costs of marketing to attract new sales, to cut the cost use open-source rather than proprietary software, manufacturing lean and flexible, the demand on the supply, and out-innovate the existing firms.
In other words, there is a powerful tool used to analysis the forces that have affect on the competitive environment in the organization and it called Porter Five Forces. The Porter Five Forces factors are threat of entry, supplier power, buyer power, threat of substitution, and competitive rivalry. The internet and digital technologies has some effect on the five Competitive Forces. The threats of entry to new entrants in small scale entrepreneurship in Kuwait such as economies of scale, a differentiated product, high capital costs, and other cost advantages. To overcome the threats of entry to new entrants in small scale entrepreneurship in in Kuwait there are many ways such as minimum viable product at start, consumer feedback responding, use pricing model disruptive, have different objectives, produce wonderful content and products, existing brand leveraging to enter a new market, marketing Viral to cut the costs of marketing to attract new sales, to cut the cost use open-source rather than proprietary software, manufacturing lean and flexible, the demand on the supply, and out-innovate the existing firms.