1. Used for external assessment.
2. 5 threats to be considered.
- Rivalry
- New Entrants
- Suppliers
- Buyers
- Substitutes
3. Stiff competition from rival in the same industry (MAS and AirAsia).
4. New entrants in the business that need to be monitored (Emergence of Berjaya Air).
5. Suppliers might be considered as a threat if they are very few and powerful. Need to minimized the threats by using backwards or forwards integration.
6. Power of buyers should be estimated clearly. If buyers is so powerful, they need to be listened or the services or products will be abandon by the buyers because they can opt for other services or brands.
7. Substitutes might be available in certain industry and might not applicable in some industry. Communication industry might face a lot of substitutes products but airlines industry for example, might not had any substitutes.
8. Porter's is very intelligent. Even in 1980's..he already can sense and predicts cause and effects of the external environmental assessment.
