The Five Forces model of Porter will be applied in this part ?Bargaining power of customers Although there are some strong competitors are also providing M. I. C. E, the market in the North is joined by very few players. Therefore, the choices for Northern customer are somewhat limited. Despite the fact that they may come to Saigontourist of FidiTour in the South but it seems to be no convenient and cost effective. Hence, the bargaining power of customers in the market for NACI is at moderate level.
It is also notable that for M. I. C. E tours, customers are more likely to come back for more if they satisfied, so that brand loyalty exists. As the result, the company should try to provide the customer with the value they demand and together with reasonable post purchase services, NACI may win their hearts. ?Bargaining power of suppliers In the context of an M. I. C. E tour, the suppliers would be ticket providers, transportation companies, and some related services providers. The number of these players is not small.
Therefore, company can have many options when deciding these suppliers (most of them) and the cost of switching is not quite significant. On the other hand, some suppliers have relatively high power. For example, if NACI order the flights from Vietnam Airlines, and due to some economic influences; they may change the faire and the company still has to take the price even when they cannot renegotiate with customers about the changes in transportation cost. Therefore, the bargaining power of suppliers over NACI may vary due to the type of services/ products they provide to the company. Threats of new entrants Vietnamese Government tried to promote the country as the destination for tourism; they even paid nearly $280 thousand for an advertisement on CNN about Vietnamese attractions (Vietnam Travel, – Vietnam tours with foot prints, 2008). Also in the focus point, the development of M. I. C. E is encouraged by government policies. Although the demand for this type of tour is increasing steadily, the market is still very new and very promising. However, as the matter of fact, any tourism company want to offer and operate an adequate M. I. C.
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E tour would be required to have high investment in term of infrastructure, distribution network, relationship, etc. Besides, since the business of M. I. C. E is B2B type, the customers (business clients) are more likely to come again if they satisfy with the value the received. By building up this relationship, business customers can have higher certainty on what they paid for. And brand loyalty exists. Therefore, the market is still open for new players, but not anyone can become new entrants. One must have strong financial situation and expertise to compete in the industry. Threats of substitutes The feature of the M. I. C. E tours is gathering customers in one location in a combined package including business and entertainment activities; and customers may come from different places. Therefore, there are no other tours that have similar functions in the industry; and company will not have to worry about the threats of direct substitutes. On the other hand, due to the hard condition of economic, many companies and organization might want to cut the cost, while the expenditure of activities in M. I. C. E tours can be quite significant.
Hence, these companies might think of using advance of information technology instead of using the traditional M. I. C. E tour. That technology is called voice IP it allows people to talk and even see each other over the internet from different locations. By using it, people can still holding virtual conferences without gathering in a real physical place. The advantage of this technology is lower cost, more convenient. However, people will not have the entertainment elements as in the traditional way; besides, virtual communication does not ave effect like a face to face one. Therefore, this is somewhat possible but not clearly a substitute ?Competitive rivalry within the industry Main operation areaStrengths & achievements SaigontouristSouth VietnamHave been doing business for more than 30 years, The name Saigontourist have become well-known in the industry, and they are considered as one of the largest tourism companies in Vietnam. Being a member in the M. I. C. E Vietnam is also one of their advantages in the market.
FiditourSouth VietnamEstablished in 1989, known as Tan Dinh Trade & Travel Service Co, they have good experiences and commerce support. Fiditour is also a big tourism company which name is known in some oversea countries. CITESouth VietnamEstablished in 1999, Best Travel Agency Indochina 2008 rewarded by Travel Weekly (Asia) Although there are some tourism company in the North of Vietnam are providing tours that have some features of M. I. C. E, however, none of them were able to offer the full package to customers.
Comparing to the Southern competitors, its parent company is also well established and owing a wide relationship network. Besides, the company itself will have a five star resort being completed in year 2008. And one important thing is that NACI’s main operation area is focus on the North of Vietnam while the other three big competitors are doing business a little far away in the South. Hence, it would be reasonable to have a positive thinking that the market in the North is still open for NACI to launch this new tour.