Forces Industry Analysis of the PC Industry - Essay Example

 1.0. Porter 5 Forces industry analysis of the PC industry Through incessant transitions in the industrial periphery, the Personal Computers (PC) industry has today emerged as one of the most dynamic and influential business sectors in the global arena. Similar to other industrial contexts, the PC industry also possesses certain unique characteristics deciphering the attributes of an oligopoly market structure (Yoffie & Rossano, 2012). Contextually, the competitive structure of the PC industry can be well-identified with the application of the Porter’s 5 Forces model. The model constitutes 5 criteria to signify the completion prevailing within the industrial context, which are (1) Risk of Entry by Potential Competitors, (2) Bargaining Power of Buyers, (3) Threat of Substitutes, (4) Bargaining Power of Suppliers and (5) Intensity of Rivalry among Established Firms. (1) Risk of Entry by Potential Competitors As stated by Yoffie & Rossano (2012), in its early years during the 1990s, the industry was dominated by “Wintel”, which was a merged form of Windows OS brand and the Intel brand. However, with the increasing demands for internet and other technology developments, the PC industry has today become comparatively open and flexible to allow new entrants in terms of “no-name clone makers”. Nevertheless, the industry is regarded to be one of the most capital intensive investment sectors encompassing rigid legal and trade norms which restrict the authentication of new players to gain a long-run sustainable foothold. High degree of innovation requirements to mitigate competitive barriers also tends to restrict the new entrants in the market lowering the risk of entry by potential competitors (Yoffie & Rossano, 2012). (2) Bargaining Power of Buyers The consumption pattern and the quantity-demanded by the buyers in the PC industry have been changing over the past few years, especially with the rising demand in emerging global markets. The buyers of the PC industry can be categorized in five sections comprising the household, the Small and Medium-Sized Enterprises (SMEs), large industry, governmental sectors and education sectors. Even though the numbers of buyers in each segment are increasing rapidly in the industry context, the household consumers of the PC market can be identified as the largest buying group in the industry. Additionally, with the availability of only few large brands within the industry, the growing numbers of buyers tend to have greater bargaining power to steer the industry competition (Yoffie & Rossano, 2012). (3) Threat of Substitutes Large brands in the PC industry can hardly be observed to witness the threat of substitutes owing to the limited diversification among the suppliers where the only differentiation concern is innovation. Notably, the supply side of the industry is dominated by Intel and Microsoft. Hence, it can be examined that threat of substitutes within the PC industry prevails in a meager degree. However, the continuous development of Information Communication Technology products such as modern cellphones with higher degree of applicability, play-stations and TV set-top boxes among others tend to impose a certain degree of threat to the PC industry (Yoffie & Rossano, 2012). (4) Bargaining Power of Suppliers As stated in the above section, the PC industry is dominated by two players, Intel and Microsoft deciphering a high degree of bargaining power owned by the suppliers. However, the domination of these two suppliers of the PC industry can be witnessed as restricted in the product line of Operating Systems (OS) and microprocessors. The other segment of suppliers comprises a wide variety serving with keyboards, micro-chips and other computer hardware products. Nevertheless, from an overall perspective, the industry structure can be examined to exhibit average, but not a meager bargaining power of suppliers (Yoffie & Rossano, 2012). (5) Intensity of Rivalry among Established Firms The existing players in the PC industry can be observed to follow an integrated approach to collaboratively restrict unhealthy or uncontrollable competition within the industry. However, when analyzing the innovation trends, a high degree of competition can be witnessed within the industrial structure. Being dominated by few large brands, the competition within the industry becomes more suppressing for the small companies to grow and the large companies to preserve their leading position (Yoffie & Rossano, 2012). 2.0. Historically, what have been Apple’s competitive advantages? Historically, Apple Inc. has undergone various alterations in its strategic and competitive visioning particularly to obtain competitive advantages in the continuously changing technology market. One of the most prudent and propelling competitive advantages gained by the company was through its integration strategy focusing on both vertical and horizontal mergers. This facilitated the company with increased flexibility in its supply chain gaining a degree of bargaining power over its suppliers and diminishing the threats of substitutes generated with the entrance of IBM in the PC market. Additionally, the responsive behavior of the company towards industry changes through rapid and successful innovations such as Macintosh (Mac), Aldus and PageMaker rewarded it with increased market share along with a sustainable competitive advantage over its rivals. Stating precisely, Apple’s pioneering vision towards environmental friendliness, innovation and competitive pricing strategies have been facilitating the company with competitive advantages (Yoffie & Rossano, 2012). 3.0. How sustainable is Apple’s competitive position in: a. Personal Computers (PCs) The competitive position of Apple in the product segment of PCs can be identified as quite sustainable. In its operations, Apple had been much responsive towards including innovative technology features in its PCs which made it easily differentiated in the expanding market. These differentiating features mostly included pioneering industrial designs, continuous incorporation of research & development strategies and most importantly user-friendly characteristics in Apple’s PCs (Yoffie & Rossano, 2012). Hence, by considering the aforementioned strategies, it can be stated that the competitive position of Apple in the PC segment has been quite sustainable. b. MP3 player Apple’s competitive position in the MP3 player segment had been sustainable even though the company had to witness certain challenges in preserving its position within the industry division. The iPhone and iPad product lines of the company was considered more advantageous and competitive than the other available MP3 players in the market attributed with the facility of online music stores through iTunes. However, Apple had to face competitive challenges where various companies such as Pandora and Spotify offered music streaming services free of cost persuading the buyers of iTunes. Hence, it can be stated that the competitive positioning of Apple had not been highly sustainable in this particular segment (Yoffie & Rossano, 2012). c. Smartphones Apple’s inclusion in the Smartphones market was influenced with high degree of competition with its major rival as Samsung. The market segment was later penetrated by Research In Motion (RIM)’s Blackberry and HTC’s 3G, 4G and its Android phones which further increased the rivalry challenges witnessed by Apple. The features of these products were again observed to be closely related augmenting the threat of substitutes for Apple by a large extent. Hence, the competitive position of Apple in the Smartphones segment had not been quite sustainable even though the brand was successful in retaining its position through rapid and continuous innovations (Yoffie & Rossano, 2012). 4.0. What are Apple’s long-term prospects for the iPad? It has been apparently observed that Apple iPad is gaining momentum in terms of its popularity throughout the globe due to its enhanced user-friendly as well as attractive technology features. Apart from the increasing popularity of Apple iPad in the business markets whether national or international, it has also been viewed that the customers in this modern day context are technological savvy desiring attractive and sophisticated products such as Apple iPad. In order to determine the long-term prospects of Apple regarding the development of one of its iPad, the company endeavors to make substantial investments for making the product line a more pioneering one with the intention of attaining its predetermined long-run business targets. These long-run targets include achieving significant portion of market share, enhancing the productivity and most importantly accomplishing superior competitive position over its chief contenders including Samsung and Nokia among others in the upcoming years. The company considers two important aspects in order to make substantial investments for developing its iPad. These include increased level of choices of the customers to use tech-savvy products and greater internationalization of business through expansion and innovation (Yoffie & Rossano, 2012; Appcelerator Inc., 2010). 5.0. What advice would you offer the new CEO Tim Cook? After acquiring a brief idea about the business performances of Apple and its long-term prospects, it can be stated that Tim Cook, the new Chief Executive Officer (CEO) of Apple, requires performing certain imperative functions with the motive of leading the company towards preserving its competitive position and acquiring better success in the technology industry in future. In order to fulfill his desired business targets, Tim Cook can adopt the decision for lowering the prices of its different valuable products to a competitive extent along with preserving the identical quality standards which would reward greater customer base to the company assisting it to expand from the elite and high income group to the middle class population as well. Moreover, Tim Cook can opt for conducting joint ventures with various national or international technology companies in order to expand its operational functions. Most importantly, Tim Cook should make incessant innovations in its different products in order to satisfy the increased level of quantity-demanded and continuously altering customers’ choices in using tech-savvy products which can assist the company to enhance its competitive positioning with the PC industry (Scribd Inc., 2012). References Appcelerator Inc. (2010). Summary. Retrieved from http://www.appcelerator.com/assets/appcelerator-mobile-developer-survey-june-2010.pdf Scribd Inc. (2012). A strategic analysis of Apple Corporation. Retrieved from http://www.scribd.com/doc/11983566/A-Strategic-Analysis-of-Apple-Corporation Yoffie, D. B. & Rossano, P. (2012). Apple Inc. in 2012. President and Fellows of Harvard College. Read More