Apple bargaining power of customers

Google bargaining power of suppliers

Although it is possible some new company, perhaps a Chinese firm with financial backing from the government, might eventually challenge Apple's position within the industry, for the immediate future, the likelihood of such a challenger arising is remote. The production of products within the industry requires an increase in capacity by large increments. So, the bargaining power of buyers can be considered as weak to moderate. Manufacturing technological devices and producing operating systems require massive capital investments. With only a few retail outlets selling the product type, it is easy for any new entrant to get its product on the shelves. This will ensure that buyers see its products as unique and do not shift easily to substitute products that do not provide these unique benefits. The product differentiation within the industry is high, which means that the buyers are not able to find alternative firms producing a particular product. They can identify game changing trends early on and can swiftly respond to exploit the emerging opportunity. The switching cost for Apple to exchange one supplier for another is relatively low and not a significant obstacle. Threat of Substitute Products Investors and market analysts often seek different perspectives for market analyses of companies to gain a better picture of companies' positions and strengths within their particular industries. Apple Inc. References Dudovskiy, J. The exit barriers within the industry are particularly high due to high investment required in capital and assets to operate.

There is no threat of forward integration by the suppliers either. Threat of Buyers Opting for Substitute Products Substitute products, within the framework of Porter's Five Forces Model, are not products that directly compete with a company's products but possible substitutes for them.

While Apple products are unique and innovative, they are premium priced. By understanding the core need of the customer rather than what the customer is buying.

porter five forces model company example ppt

The smaller and more powerful the customer base is of Apple Inc. For example services like Dropbox and Google Drive are substitute to storage hardware drives. This weak bargaining power of suppliers is because of the high level of company concentration to the supplier concentration, medium to high level of supply, and high number of suppliers.

Apple competitive environment

For example, many popular apps are available for Android and iOS devices, and cloud storage services from different companies are available to iOS users. To be specific, if new market entrants base their customer value proposition on innovative products and services, they can overcome all market entry barriers discussed above. However, the bargaining power of Apple customers in particular is not less compared to the industry average. Customers often seek discounts and offerings on established products so if Apple Inc. Porter Five Forces focuses on - how Apple Inc. It is founded in and has become the dominant competitor of the industry. Capital is needed to obtain resources in general and to attract human resources and talented employees in particular. Apart from that Apple products are not developed entirely by any single supplier. Thanks to simple yet attractive design coupled with advanced features and capabilities of its products, Apple has created a large base of loyal fans. Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition. Rivalry among the Existing Competitors If the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the overall profitability of the industry. Apple Inc needs to focus on differentiating its products so that the actions of competitors will have less effect on its customers that seek its unique products. For example services like Dropbox and Google Drive are substitute to storage hardware drives. Digital media innovation and the Apple iPad: Three perspectives on the future of computer tablets and news delivery.

Thus, the overall threat of new entry is moderate. Apple Inc can focus on innovation to differentiate its products from that of new entrants.

Apple Inc needs to build a large customer base, as the bargaining power of buyers is weak.

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Apple Inc. Five Forces Analysis (Porter’s Model)