PC World Competitive Intelligence - Essay Example

Running head: PC world competitive intelligence 20th February Introduction Technology based companies have been working tirelessly to make sure that firms and other individuals can get the desired high-quality machines that meet the consumer needs. For example high-speed personal computers that can multitask. Innovation and creativity have played a key role in the development of the companies since consumers need electronic machines and other household appliances that meet their need. This paper seeks to discuss the PC World retailer and the main competitors. Additionally, it will conduct a competitor analysis and interpretation of information that informs the competitors. This paper seeks to use the porters five forces theory to explain the competitor analysis. PC World is known as the largest retail computer superstores located in United Kingdom. PC World was established in 1991. Later In 1993, the company merged with Currys PC World. The company is headquartered at Hemel Hempstead in United Kingdom. In 2005, the number of the employees was approximated to be 5,528. The company has a slogan that brings individuals together in the term of technology “we start with you”. PC World began to expand and made acquisitions of DN computer services, Byte computers stores limited and micro ware house in 1996, 1998 and 2004 respectively. PC World in 2006 started to link itself with homes and started home entertainments and installation services. The business reported a loss of $29.8 million in 2008 but in 2007 it had a profit worth $52.4 million. Currently, the company operates in United Kingdom and Ireland. This is after some stores were closed, for example, in 2009 Sweden stores were closed and in 2011 Spanish stores were also closed. Later in Italy they were closed making the company to operate in United Kingdom and Ireland only. Main competitors of PC World One of the major competitors of PC World is Dixons Retail that is located in United Kingdom. The company has different stores that are approximated to be 530 in UK and Ireland. Additionally other outlets are operational in northern Europe with the number standing at 322 stores. Dixons Retail have specialized in market technology, for example, electronic products, audio –video machines personal computers, photographic machines, installation and repair, mobile services among others. Dixons Retail was founded in 1937 and is the major competitor of PC World since they sell the same brands though Dixons have specialized in market. Comparing with PC world, Dixons Retail operate in UK and Ireland where 530 stores are operational with a market share of 40%. For example, in UK different stores that have specialized in what they offer to the consumers vary. Dixons travel deals with UK airport, Currys deals with electronics and other household appliances and DSGI deals with IT solutions. Dixons market share in North Europe and Southern Europe is about 32% and 13% respectively. In Northern Europe, the companies have specialized their brands to meet the consumers need. For example, electrical Giant offers electronics and household appliances in different countries such as Denmark and Sweden. Gigantti (Giant) provides the same electronics and household equipments in Finland. Electro World is offering wider appliances in homes and offices in Slovakia and in Czech Republic. In Southern Europe, the products are in Greece in chain while in the other parts they are in smaller amount. Comparing with PC World, that was operating at a profit and other times in the loss, Dixons had the following profit from 1998 to 2013. year 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 Profit before tax (£m) 115 70.8 224.2 112.6 140.5 192.9 295.0 302.6 336.7 278.5 The second competitor of PC World is Computer World Services Corp (CWS). CWS Company deals with IT equipments and supplies them. The company was established in 1990 by Frank Hameed. It resells technology appliances like computers, network cables, computer software and data storage devices. Since the enterprise has wider networks coverage of information technology services, it operates along with Cisco systems. The world has been digitalized, and thus individuals use computers every day and search engines in their daily routines. The use of data cables that are supplied by Computer World Services Corp facilities easy data sharing among the companies and individuals is possible thus giving the company a competitive advantage over the PC World. CWS, unlike the Dixons Retail, does not have many stores but in United States it has four operational stores. One of the outlets is in the East and the second is located on the coast of United States. They have another store in Germany and in Bahrain that makes it easy to deliver their products to the consumers. The company has a competitive advantage over the PC World since it supplies their products to the federal government, state and the local government. It also supplies the same products to AT&T among other companies. Apple Company is known for offering Smartphone’s though the company also provides other household electronics to the consumers. For example Macintosh among other products like data cables that the customers use to access internet services. The notebook components that are used still play a significant role in the competitive advantages of the PC world. For instance, currently individual uses the Smartphone to do their daily today routines. As compared to PC World that will provide computer services an individual will use the smartphone to access anything posting a threat to the PC World. Theory that informs the Competitor Analysis Porter’s five forces model One of the application theories that inform the competitor analysis is Porters five forces model. Notably the theory focuses on the five forces model that exists in the market concerning the competitor. This indicates that in the market, stiff competition on the supplier exists and can be explained well using the theory. The forces that are suggested to drive the stiff competition are Existing competitive rivalry between suppliers Competition exists between the suppliers, for example, in the case of Dixons Retail; it deals with wider variety of home and industry appliances. Notably it has many outlets in different geographical areas. The 530 stores that are located in United Kingdom plays a significant role by ensuring that the competition is stiff. The companies deal with information technology and other electronic equipments in households (Gandellini and Pezzi, 2012). PC World deals with the same products and home entertainments and installation services with stores in United Kingdom and Ireland after others were closed meant that competition has to be stiff. This gave the competitive advantage of Dixons Retail and Computer World Services Corp (CWS) to prosper in different parts. The stores that exist make it possible for the companies to increases the sale volume and thus the competition tend to be stiffer between Dixons Retail and CWS. Market segments that are created to deal with supply of the products as in the case of Dixons Retail make it possible to provide the products in easy way since they have specialized in their products. Different segments located in various parts of Sweden, Finland, Denmark and Czech Republic among others played a significant role in the supply of the various products. Threat of new market entrants PC World was established in 1991, and the Computer World Services Corp (CWS) was established in 1990 and thus there was a new market entrant. This posted a threat to PC World since the company dealt with the same supply of the products. Dixons Retail was established in 1937 and when the two firms were being established threat of new market entrants existed. When a corporation is being formed, there is need to come up with a strategy to deal with new market entrants so that the enterprise cannot close the stores due to market competition (Ryans, 2008). Pricing strategy must be incorporated in, starting new market segments and high-quality products that meet the consumer needs. The new competitors that are emerging in the market like CWS and other companies that deal with computer services and other electronic appliances post a lot of threat to PC World. This is due to the fact that consumers demand may be low but the supply is high indicating that companies like Dixons Retail and Computer World Services Corp have to compete stiffly to convince the consumers that the products available are of high quality and affordable. Bargaining power of the buyers To make sure that the products and services that are provided by the company must have the bargaining power to the consumers. This lowers the competition of the business since individuals who buy the products like the bargaining of the products (Chen, 2009). The discount that is provided makes the company have the competitive advantage over the competitor. The consumers may demand high-quality products and other services at lower price and thus they will exert a lot of pressure till the supplier will give it in. This indicates that the buyer has the power and thus the supplier will have to consider the consumer. Power of suppliers Since Dixons Retail has more variety of products to offer it has a competitive advantage as compared with PC World. This means that the vendor may lower the prices or even lower the quality of the product. As in the case of Dixons Retail, it has the power of the supplier since they have a lot of buyers from different geographical areas (Leibner and Mader, 2009). This gives Dixons Retail the competitive powers due to many outlets that are operational in various parts. For example, in this case, the supplier is one but has a lot of buyers indicating that the supplier power is high of Dixons Retail as compared to that of PC World. Threat of substitute products (technology change) There exist a threat of substitute in the market. For example, PC World is known for supplying computer services among other household electronic equipments. There is a competitive power since there is a threat of substitute since Dixons and Computer World Services Corp offers the same products to the consumers in bulk. Threat of substitute plays a significant role in the industries since competition is shaped, and thus products that meet the consumer needs are likely to immerge in the market. The case scenario is depicted in the PC World and the other competitors since they offer the same products to the consumers, but the best quality is the one the consumer uses. Conclusion The use of technology has been the key strategy that is employed by the companies meets the consumer requirements. Innovation and creativity are used to create high-quality products that can meet the demand of the consumers. Stiff competition in the organizations plays a significant role of making sure that high-quality brands are available in the market that meets the consumer needs. Additionally, the prices of the commodities vary due to the competition since the firms must use pricing strategy to attract the consumers. Discounts can be used to make sure that the users can be satisfied and increase the sale volume. Porter’s five forces have been used to analyze the competitive theory of PC World. Using the theory of porter’s five forces it has explained Existing competitive rivalry between suppliers. Threat of new market entrants has also been discussed where an emerging firm is a threat to the existing one since they may opt to use pricing strategies so that they can compete with the other companies. Consumers use bargaining power to make sure that the products can be sold at lower prices, and thus competition being increased if one of the companies does not incorporate the bargaining power of the buyer. The suppliers still have power to control the volume that can be available to the consumer. The quality of the brands depends on the suppliers since they may lower the quality of products thus making it hard to convince the consumers that the product is of high quality. References Chen, F. 2009. Substitution and variety, group power in negotiation. Los Angeles, California: University of Southern California. Gandellini, G., & Pezzi, A. 2012. Strategy for Action - I the Logic and Context of Strategic Management. Dordrecht: Springer. Leibner, J., & Mader, G. 2009. The power of strategic commitment achieving extraordinary results through total alignment and engagement. New York: American Management Association. Ryans, A. 2008. Beating low cost competition: How premium brands can respond to cut-price rivals. Chichester, England: John Wiley & Sons. Read More