For example, you could take fair advantage of a strong position or improve a weak one, and avoid taking wrong steps in future.
Public Domain Apple has achieved success as one of the most valuable companies in the world. This Five Forces analysis gives insights about the external factors influencing the firm.
Established inApple has been through low times.
However, under the leadership of Steve Jobs, the company has succeeded to become an industry leader. Based on this Five Forces analysis, Apple continues to address competition and the bargaining power of buyers, which are among the most significant external factors impacting the firm.
Also, this Five Forces analysis indicates that Apple must focus its efforts on these two external factors to keep its leadership in the industry. Competitive rivalry or competition strong force Bargaining power of buyers or customers strong force Bargaining power of suppliers weak force Threat of substitutes or substitution weak force Threat of new entrants or new entry moderate force Considering these five forces, Apple must focus its attention on competitive rivalry and the bargaining power of buyers.
The firm effectively addresses the five forces in its external environment, although much of its effort is to strengthen its position against competitors and to keep attracting customers to Apple products.
Competitive Rivalry or Competition with Apple Strong Force Apple faces the strong force of competitive rivalry or competition.
High aggressiveness of firms strong force Low switching cost strong force Companies like BlackBerry, Samsung, LG, and others aggressively compete with Apple. Such aggressiveness is observable in rapid innovation, aggressive advertising, and imitation. On the other hand, switching cost is low, which means that it is easy for customers to switch from Apple to other brands, thereby making competition even tougher.
Low switching cost strong force Small size of individual buyers weak force It is easy for customers to change brands, thereby making them powerful in compelling companies like Apple to ensure customer satisfaction.
This condition makes customers weak at the individual level. However, because it is easy to shift from Apple to other brands, buyers still exert a strong force. Thus, this part of the Five Forces analysis shows that Apple must include the bargaining power of buyers or customers as one of the most significant variables in developing strategies.
High number of suppliers weak force High overall supply weak force Even though Apple has less than suppliers of components for its products, the company has more options because there are many suppliers around the world.
This condition makes individual suppliers weak in imposing their demands on firms like Apple. In relation, there is a high level of supply for most components of Apple products.
Thus, this part of the Five Forces analysis shows that Apple does not need to prioritize the bargaining power of suppliers in developing strategies for innovation and industry leadership.
High availability of substitutes moderate force Low performance of substitutes weak force Substitutes to Apple products are readily available in the market. For example, people can easily use digital cameras instead of the iPhone to take pictures.
They can also use landline telephones to make calls. However, these substitutes have low performance because they have limited features. Many customers would rather use Apple products because of their advanced features.
This part of the Five Forces analysis shows that Apple does not need to prioritize the threat of substitution in business processes like marketing and product design and development. High capital requirements weak force High cost of brand development weak force Capacity of potential new entrants strong force Establishing a business to compete against firms like Apple requires high capitalization.
Also, it is considerable costly to develop a strong brand to compete against large firms like Apple. These factors make new entrants weak. However, there are large firms with the financial capacity to enter the market and impact Apple. Google has already done so through products like Nexus smartphones.
Samsung also used to be a new entrant. These examples show that there are large companies that have potential to directly compete against Apple. Thus, the threat of new entry is moderate.
This part of the Five Forces analysis shows that Apple must maintain its competitive advantage through innovation and marketing to remain strong against new entrants. A comparison of communication using the Apple iPad and a picture-based system.
Digital media innovation and the Apple iPad: Three perspectives on the future of computer tablets and news delivery.The Five Forces model aims to examine five key forces of competition within a given industry. The main force examined by Porter's model is the level of competition within an industry.
Porter’s five forces model is an analysis tool that uses five industry forces to determine the intensity of competition in an industry and its profitability level.
 Understanding the tool. Five forces model was created by M. Porter in to understand how five key competitive forces are affecting an industry.
Industry analysis—also known as Porter’s Five Forces Analysis—is a very useful tool for business strategists. It is based on the observation that profit margins vary between industries, which can be explained by the structure of an industry. Analyze the business model of Zipcar using Porter’s five forces model Threat of New Entrants: There is a medium threat of new entrants on the market.
Although the car rental system have existed long time, the hourly system was first introduced by Zipcar.5/5(1). What is Porter’s five Forces model?
This model helps marketers and business managers to look at the ‘balance of power’ in a market between different types of organisations, and to analyse the attractiveness and potential profitability of an industry sector.
Porter’s Five Forces In Action: Sample Analysis of Coca-Cola Since its introduction in , Michael Porter’s Five Forces has become the de facto framework for industry analysis. The five forces measure the competitiveness of the market deriving its attractiveness.