Question

On Competition & Porter’s Five Forces

Provide a descriptive discussion of the Five Forces Model of Apple Inc. and include what Wheelen and Hunger call the sixth force in your analysis.

Answer 1

Porter 5 forces Model gives a framework approach to study the competition concerning different players of the industry and it can be applied for apple.
The 5 forces Model for apple can be described as below:
First Force: Internal Rivalry: Internal rivalry among the competitors is very high in case of smartphone or personal computer space, there is huge pressure on margins and Apple can retain its large market share and decent margin because of the brand equity which apple has for its brand and there is huge fan following of the brand and they associate apple brand with something which is highly valued and this holds if we look at apple’s market capitalization.
Second Force: Threat of new entrant: Threat of new entrant in this market segment is very high, technology-based market segment is most un-predictive and to remain in the market you must be ahead of learning curve of your competitors and apple because of it strong R&D has been able to lead the segment with its innovation and capability to bring something customer never thought of. But the barrier for this market is very low and it raises the threat of new entrants for apple corporation.
Third Force: Threat of substitute: Of course there is threat to apple in terms of substitute if we consider the technology alone but the market or the target segment where the apple has got its reach is not only because of technology it is combination of technology, innovation, and quality as well reliability of its products, hence in this area, apple has stronghold and threat of substitute is relatively low.
Fourth Force: Bargaining power of suppliers: Apple’s supply chain is dominated by the technology given by apple and it the proprietary of apple which their suppliers cannot hold. And since there are a large number of component supplier with good quality and apple’s ability to infuse quality in the process and product of its component suppliers makes the case where suppliers have very low bargaining power.
Fifth Force: Bargaining power of buyers: well if we have to analyze the bargaining power of buyer then yes they have because of many options which are present today, some may be technologically much advance than apple and maybe meet certain good standard of quality but the connect of apple’s brand with its target segment where the key is, and it is obvious the key is in hand of consumers to whom apple has to keep amazing with every products.

The Sixth forces which Wheelen and Hunger call relative power of stakeholders: Sinc Apple is a company working in tech-based product industry and in such industry, the role of stakeholders is very important because of the knowledge which each of the stakeholders have on the product, market, technology, competition, etc. hence relatively the stakeholders hold good amount of power.