Porter's Five Analysis on the Apple Inc. Essay

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Apple Inc. is a technology company widely known for the designing, production and selling merchandise to do with mobile phones, music and computers. Apple has become some sort of a cult-brand over the past few years with its lifeline being retained and marinated by iTunes, Imac line, and QuickTime. Apple has increasingly concentrated on increasing the market share of their iPhone which has a range of smartphones of varying specifications. In the long term pursuit, Apple wants to be the highest seller of their merchandise at the global platform, and it is this long-term goal that informs this analysis to see the challenges and opportunities that Apple faces in this pursuit.

The porter’s five forces model of analysis of markets often takes into account five major areas, just as the name suggests. These five forces are as follows, with the ratings alongside in the concept of Apple smartphones; 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).

Competitive rivalry or competition

Most IT companies face high competition within the technology oriented market especially in the contemporary highly dynamic world of technology. Due to its successful trend, iPhone has attracted immense competition from other brands like Samsung, LG, Blackberry and Lenovo in the smartphone market. There are two major external factors that iPhone has to contend with, the high aggressiveness of firms and the low switching cost. The aforementioned competing brands engage in aggressive advertising, rapid innovation as well as imitation to always catch up with iPhone as a brand.

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The switching cost is also quite low which technically means it can be very easy for customers to switch from iPhone to the other brands. Apple products and the iPhone in particular hence faces high product substitution possibility, the technology of the year after or even a few months ahead may be totally different hence Apple must have the correct approach to the prevalent business environment (Wendel Clark, 1999).

Bargaining power of buyers or customers

The customer bargaining power can easily affect Apple’s business and this power is based on these two external factors; low stitching cost which is a strong force, and small size of individual buyers which is a weak force. Customers can easily change brands which makes them a powerful force in forcing Apple to work hard towards customer satisfaction. In line with the customer purchases, a single purchase is way small in comparison to the total revenue of Apple, however, due to the strong possibility of customers switching, the company still feels the force from customers. Customer bargaining power still remains one of the most significant variable in formulation of strategies otherwise the threat of having new entrants taking over the market share of the company remains to be a real threat (Team FME, 2013).

Bargaining power of suppliers

In the case of Apple and its iPhone brand which is of interest here, Apple faces a weak force of the supplier bargaining power, meaning suppliers cannot easily impose their demands on Apple. On this aspect, Apple enjoys two external factors that render the suppliers weak in the bargaining power; there is a high….....

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