...The Five Forces Framework and Competitive Strategy In this framework due to Michael Porter there are two high-level stages in the creation of competitive strategy, each stage corresponding to a high-level determinant of profitability mentioned in the previous section. The first stage is the assessment of the attractiveness of the industry in which a given company is embedded based on a structural analysis of the industry. In this stage, called the five forces framework, five forces that influence industry attractiveness are identified, as well as the factors (e.g., number of competitors, size of competitors, capital requirements) that determine the intensity of each force and therefore the cumulative intensity of the five forces. The purpose of the five forces framework is to relate the degree (or intensity) of competition in a given industry, as qualitatively measured by the combined strength (or intensity) of five forces, to the attractiveness of the industry, defined as its ability to sustain profitability. Based on the structural analysis, a particular company may be in a very attractive industry (e.g., pharmaceuticals) or in an unattractive industry (e.g., steel). However, though a firm exists in an unattractive industry, it can still be highly profitable by choosing the proper competitive position within the industry, for example, e.g., a mini-mill such as Nucor in the steel industry in the nineteen-eighties. The second stage of strategy creation addresses the competitive...
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...Course Name: Strategic Management Introduction ASUS is the world's fifth-largest PC vendor by 2013 unit sales (GSWPSDPIFQ, 2014). In the ultra-competitive IT industry, ASUS’s success is noticeable. In this essay, Five Forces Model is used to analyse the reason for AUSU’s success and its opportunity and challenge in the future. It introduces some information about AUSU at first. Then it states Porter’s Five Forces Model and the application of it. Finally, some important changes taking place in the macro-environment that might have an impact on the IT industry especially on PC suppliers such as AUSU will be discussed. In this essay, it focuses on two major changes influence PC companies as AUSU. The first one is the popularity of tablet PCs as IPAD. The second one is the exploding of smart phones as millions of people upgrade from simple ‘feature phones’ to more sophisticated Smartphone like the iPhone and Android. Both of them are relevant with Threats of substitute products. Discussion Firstly, ASUS’s is introduced, this is the world's fifth-largest PC vendor by 2013 unit sales ASUS appears in Business Week’s ‘InfoTech 100’ and ‘Asia’s Top 10 IT Companies’ rankings, and it ranked first in the IT Hardware category of the 2008 Taiwan Top 10 Global Brands survey with a total brand value of $1.3 billion (Asus Reviews, Ratings, and Pricing, 2014). ASUS has a primary listing on the Taiwan Stock Exchange and a secondary listing...
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...Theory and Analysis................................................................................................................................. 4 Research question 1: The structure of the PC industry....................................................................... 4 Research Question 2: The difficulty of Apple in the PC industry over time ........................................ 7 Research Question 3: Sustainability of competitive advantage for Apple in the PC business .......... 10 Strategic advice ..................................................................................................................................... 12 Conclusion and Reflection ..................................................................................................................... 12 References ............................................................................................................................................. 13 2 Introduction In 1976 Steve Jobs and Steve Wozniak founded Apple Computer Inc. together with a group of 20 other people and started out in Steve Jobs garage. Apple started making computer circuit boards and followed that with an easy to use computer in 1978, through the years it focused on the PC business and developed applications for their own Macintosh computers. They created laptops called the Macbook in 1994 and even entered the MP3 player industry with the iPod brand in 2001 and more recently the mobile phone industry with the...
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... Dell Inc. Competitive forces The Competitive forces has five forces which are threat of new competition; threat of substitute products or services; bargaining power of customers or buyers; bargaining power of supplier; and intensity of competitive rivalry. I. Threat of new competition: In the other word, it is the threat of new entrants. For the threat of new entrants, based on the Porter's five forces, a model for industry analysis, " Barriers to entry are more than the normal equilibrium adjustments that markets typically make." (Porter's Five Forces). If a company wants to enter a new market, it should consider about the following factors in the industry which are Government policy, economies of scale, capital requirements, brand identity, absolute cost advantages and Industry profitability etc. II. Threat of substitute products or services: According to Wikipedia, " The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives. Note that this should not be confused with competitors' similar products but entirely different ones instead." (Porter five forces analysis, 2009). Many factors such as switching costs, buyer inclination to substitute, price performance, and trade- off of substitutes should be considered by a company. III. bargaining power of customers or buyers: based on Wikipedia"The bargaining power of customers is also described as the market of outputs: the ability...
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...Business and Management Vol. 4, No. 11 In-Depth Analysis of PC Industry in China Xiaojun Cui Department of Business Administration, Guangdong Radio and TV University Guangzhou 510091, China E-mail: xjcui@gdrtvu.edu.cn Abstract Personal Computer (PC) industry in China has experienced a rapid growth in China in recent years, and has played a more and more important role in the national economy. This motivates us to analyze the business environment and strategic situation of the PC industry in depth. A PEST analysis is carried on to analyze the business environment of the PC industry, and Porter's five forces analysis is used to analyze the competitive nature of PC industry in China. Keywords: China’s PC industry, PEST Analysis, Porter’s Five Forces Analysis 1. Introduction The aim of this paper is to analyze the business environment and strategic situation of personal computer (PC) industry in China. The motivation of an in-depth analysis of PC industry in China stems from the fact that PC industry has played a more and more important role in national economy of China, and has an important effect on the society. Since the emergence, PC has become a necessary tool in daily life in the society. Moreover, with the advances of technology, PC carries more and more functions and attracts more and more users. Now the PC market is mature and close to saturation in the developed countries, while the development of PC industry is still experiencing a rapid growth in the developing...
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...Rauchenberger Five Forces Industry Analysis Michael Porter explains in detail the largest factors influencing profitability in any industry in the article The Five Competitive Forces that Shape Strategy and gives his opinion on what to do once they are identified. These five factors can be evaluated with respect to the Personal Computer (PC) industry based off of a 2012 case study of Apple Inc. Rivalry among existing competitors, the first and most obvious of the five competitive forces, is a strong force in the PC industry with great impact on profitability. Rivalry is high because the competition in the computer industry is very intense among very few serious competitors. The top four PC vendors (Hewlett-Packard, Dell, Lenovo, and Acer) accounted for 53.6% of worldwide shipments in 2011. Leadership in the industry has shifted numerous times, leading to slight differentiation and price competition by each company in an attempt to get ahead. Threat of new entrants is a weak competitive force for the PC industry. The presence of the four existing dominant players and significant barriers to entry deter new competitors from seriously entering the market. A new company would need to heavily invest in research and development and quickly generate brand recognition, and therefore would be unlikely to cause a large threat. Bargaining power of buyers Michael Porter explains in detail the largest factors influencing profitability in any industry in the article The Five Competitive...
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...operating systems, the Microsoft office suite among others. It has a high profile reputation of quality services and products that are consumed by both large-scale and small-scale consumers. The paper intends to analyze and deduce the factors of operation of the corporation. That includes the mission statement, the vision statement, culture, SWOT analysis amongst other attributes that determine the extent in which the corporation is an outstanding performer. Mission, Vision, Goals, and culture Mission At Microsoft, the central mission is to enable the people, as well as, the businesses across the international borders to realize their absolute potential. Particularly, the corporation considers it a mission to focus on the commitment to the customers. As such, the corporate attempts to articulate the full measure of the mission by striving to ensure that it creates outstanding technology. The technology is also developed in such a manner that everyone can access it regardless of the demographic characteristic such as ages and abilities. According to the contemporary company ratings, Microsoft is considered to be an industry leader in the context of technological innovation. Just like it is stipulated in the mission statement, it ensures that its products are safe and easy to use. Vision...
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...Bellner From: Joel Meyer, Daniel Orlando, Raymond Osterhage Date: February 5th, 2015 Re: Apple Case Analysis How attractive is the PC industry? Conduct an industry analysis on the PC industry (A) in its early stages, and (B) in its later stages. Comment on how the industry has evolved. The PC industry has been declining over the years. In the 1980s and 1990s, it was the only option for people who wanted a computing device. As Apple moved into the market and started designing new devices, along with innovation from other companies, the PC industry has shrunk. Early on, the PC industry could be viewed pretty heavily as an oligopoly. There were several main companies that dominated the market, including Dell, Hewlett-Packard, and Microsoft. Not much has changed over the years in the industry, though. While there are new companies in the market, it is still very heavily dominated by several big companies. The case even mentions that Hewlett-Packard, Dell, Lenovo, and Acer accounted for over 50% of worldwide PC shipments in 2011. In order to conduct an industry analysis on the PC industry both at the beginning, and in the later stages, Porter’s Five Forces and the PESTEL framework can be used. Porter’s Five Forces that can be used to analyze the industry are barriers to entry, supplier power, customer power, threat of substitutes, and rivalry. For the early years of the PC industry, the barriers were relatively high. There were only a few brands that had a lot of brand name power...
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...Introduction…………………………………………………………………3 2.0 Overview of Industry Life Cycle……………………………………………4 3.0 Literature review of Information Technology………………………………4 4.0 Conclusion for Industry Life Cycle…………………………………………5 5.0 Industry Level Analysis (Dell)………………………………………………6 6.0 Business Strategy……………………………………………………………7 7.0 Enterprise Solutions and service…………………………………………….8 8.0 PEST Analysis of Dell Company…………………………………………...11 9.0 Porters Five Forces of Dell………………………………………………….13 10.0 Stage of Industry Lifecycle of Dell…………………………………………16 11.0 Recommendation to improve performance of Dell…………………………17 12.0 Conclusion…………………………………………………………………..18 Bibliography………………………………………………………………………....19 Appendix…………………………………………………………………………….21 Overview of Industry Life Cycle Industry Life Cycle (ILC) is the stages of evolution through which an industry progresses as it moves from conception to stabilization and stagnation. Different analyses posit different stages of an industry life cycle (usually four to five), but all emphasize that an industry has a beginning, with technological innovation; a period of rapid growth; maturity and consolidation; and finally decline and possibly death. Industry dynamic impacts firm strategy and survival, and it is important to managers understanding that whether firm should compete or cooperate at different stages of the industry life cycle (Wilson & Hynes, 2009). One of the main tenets of how firms and industries evolve is that, as some businesses mature, the...
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...competitive landscape of the PC and peripheralsindustry through analysis of thecompany strategy, business model, distribution channels, competencies and value chain to provide a series of recommendations for Acer’s Board of Directors. Acer is the third largest PC manufacturer in the globe using atransnational strategy to procure components to maintain cost leadership. By using strategic group maps, Porter’s five forces, SWOT analysis, value chain review and the Dranove model a comprehensive analysis of the Acer external and internal forces are reviewed. On the basis of the analysis a series of recommendations have been made to ensure that Acer remains competitive, retains the number 3 ranking and are sustainable into the future. It is recommended that Acer find blue ocean against competitors through the use of the premium branding of product, whether this be Ferrari or another premium luxury brand and determine if some of this can be derived from sustainable and green materials. Once these are determined it is recommended to use a balance scorecard with alliances to help drive innovation together with a tried and tested sales system to increase Acer market share. Background and Context Acer is the third largest PC Company in the world (9.5% market share) with growth being experienced outside the mature USA market, predominately in emerging nations. Although Acer experienced growth in 2007, increasing its sales by 32.9%, the PC and peripherals industry is very competitive and...
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...Michael E. Porter explains in his "How Competitive Forces Shape Strategy" that the state of competition in an industry depends on five basic forces: new entrants, suppliers, buyers, substitutes, and industry competitors. In this paper, I analyzed the competition in the personal computer (PC) industry using Porter's Five-Force Analysis. 1. Buyers (strong) Buyers of personal computers are businesses, governments, educational institutions, and individuals. Large businesses, governments, and schools, which buy computers in large volumes, have the power to bargain on price, quality and service. Personal computer buyers are price-sensitive. However, buyers have less power when the switching costs and brand-loyalties are high. Thus, PC manufacturers can reduce a threat of buyer power by differentiating their products. An example is Apple Computer. Apple's unique operation system and its computers specifically targeted to publishing and designing industry prevent their buyers from switching to competitors' products. Its sleek product design represented by iMac and iBook also acquired many fans and increased brand-loyalty. But, despite several ways in which manufacturers have differentiated their products and found ways to increase switching costs, customers still see units as very similar and thus choose primarily on price. 2. Suppliers (Moderate) Components for manufacturing personal computers are the microprocessor, motherboard, memory storage, and peripherals such as...
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...Lenovo is the number one PC maker in Chinese PC industry which gained 35.8 percent of market share in 2007. In recent year, it started to operate businesses out of greater China such as Asia Pacific, Americas, Europe, Middle East and Africa. Lenovo’s current pillar strategy is that strive to grow faster and more profitably than the industry by delivering best-engineered PCs and unequaled ownership experience in the global PC market. Since the Lenovo decided to go international, the Europe becomes as part of battle for Lenovo to explore. In this paper, the market of Lenovo in Europe will be focused on the UK. The growth of in UK was achieved through improve sales to large firms and growth in the mid-market segment through a strengthening of the Group’s sales resources. Europe is a key strategic market and battleground for Lenovo. 1. Introduction Lenovo was set up in 1984 as a reseller in China and Hong Kong for the members of the Chinese Academy of Sciences like IBM and Hewlett-Packard. By 1989, now known as Hong Kong Legend has branded out into motherboard manufacturer and it has changed its name to Lenovo and launched itself on the Hong Kong Stock Exchange in 1994 (Malone, [n.d]) . Since 1996, it beat the foreign giants to be the best-selling PC brand and outsell many foreign brands (not just PCs) in the Chinese market. Since Lenovo decided to go abroad and diversify its products and try to produce high tech products, the market share in China were approximately 30 percent...
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...1. Apple did better in its iPod business than it did in its PC business. Explain why. Justify your answer through the application of industry analysis and other strategy concepts discussed in this course. In the early years, Apple focused on manufacturing low cost computers, working together with IBM, cooperating with Novell and Intel to create a new operating system that run on Intel platform. However, these projects had not achieved success until Steve Jobs became the CEO and refocused the original strategy for Apple. Jobs was able to create a competitive advantage for the company through restructuring and innovating software, hardware, marketing, digital asset management, retail strategy, and product differentiation. With these advantages, Apple was saved from bankruptcy and has gained a positive reputation, more customers, and large profit margin. The struggle of Apple incorporate in the PC industry was mostly due to the company’s inability to utilize Porter’s Five Forces. Porter’s Five Forces analysis is a powerful tool for understanding a company competitive position in the industry. The first three CEOs of Apple (Scully, Spindler, and Amelio) failed to address these forces and led the company to the edge of bankruptcy, which largely contribute to the reason why Apple’s PC industry suffer more than its iPod business. Intensity of Competition The present of several large PC manufacturers such as IBM, Dell, Hp, Acer, etc. substantially increases the intensity of competition...
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...PORTERS FIVE FORCES Porter's Five Forces is a framework for industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979. Porter referred to these forces as the micro environment. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. The overall industry attractiveness does not imply that every firm in the industry will return the same profitability. Firms are able to apply their core competencies, business model or network to achieve a profit above the industry average. The five forces of porter’s five forces model are as follows: 1. The threat of the entry of new competitors 2. The threat of substitute products or services 3. The bargaining power of customers (buyers) 4. The bargaining power of suppliers 5. The intensity of competitive rivalry 1. The threat of the entry of new competitors Profitable markets that yield high returns will attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry. The new entrants face barriers to entry. They need to overcome them to compete successfully. Some of the barriers are capital requirement, customer loyalty, experience, etc. Specialized technology, production and distribution require high capital costs which acts as one of the barrier. The high customer’s loyalty and experience of the established firms also...
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...Differentiation is the current strategy position of Apple Inc. There are five main firms in the PC industry and among them; the world’s leading brand is Dell. Apple’s major target is to sustain their present strategic position and to take over the market position as a leader. The key stakeholders include Steve Jobs, employees, lenders and the government. Apple markets Apple’s industries Person computers Person media Africa North/South America Desktops IPad I phone Apples markets Asia and Middle east Europe IPod Apple store Notebooks Apple services iTunes Apple’s products Laptops Mission statement Apple’s mission statement is to become a leader in providing simple, powerful, high-quality information products and service for people who learn, communicate, and create. External and internal analysis In order to identify the major threats and opportunities faced by Apple, conducting an external analysis is very important. The models that are going to be used include; PESTEL analysis, Porter's 5 forces and SWOT analysis (opportunities and threats). And the internal analysis analyses the factors that give an organization certain advantages and disadvantages in order to fulfill the needs of its target market. The models which are going to be used for internal analysis are - the value chain, Vrio, Tows matrix, BCG and Ansoff matrix’s. Macro environmental analysis PESTEL analysis is the best tool to...
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