Scribd
Upload
239 views2 pages

Apple Five Forces

Apple faces strong competitive rivalry in the smartphone market from aggressive competitors like Samsung, Oppo, and Xiaomi. Customers have low switching costs between brands and are well-informed, giving them strong bargaining power. While Apple has many suppliers, its large scale limits suppliers' bargaining power. Substitute products provide moderate competition, though Apple's brand loyalty reduces substitutability. The threat of new entrants is moderate, as establishing a new brand requires significant capital, but large companies have the potential to compete directly with Apple.

Uploaded by

gary tan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
239 views2 pages

Apple Five Forces

Apple faces strong competitive rivalry in the smartphone market from aggressive competitors like Samsung, Oppo, and Xiaomi. Customers have low switching costs between brands and are well-informed, giving them strong bargaining power. While Apple has many suppliers, its large scale limits suppliers' bargaining power. Substitute products provide moderate competition, though Apple's brand loyalty reduces substitutability. The threat of new entrants is moderate, as establishing a new brand requires significant capital, but large companies have the potential to compete directly with Apple.

Uploaded by

gary tan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Apple has achieved success as one of the most valuable companies in the world.

This Five Forces analysis based on Porter’s Framework, points to the following strengths or instensities
of external factors in Apple environment:

1. Competitive rivalry or competition : STRONG

-High aggresiveness of firms = STRONG


-Low differentiation of products = STRONG
-Low switching cost = STRONG
-Moderate to high numerous competitors = MODERATE
-High rivals have diverse objectives, strategies, and countries = HIGH

Companies like Samsung, Oppo, Xiao Mi, and Vivoo aggressively compete with Apple. Aggresiveness
comes from rapid innovation, aggressive advertising and imitation. In terms of product differentiation,
available products in the market are generally similar in fulfilling specific purpose. For example there are
many popular apps available for android and ios and cloud storage services from different companies.
This condition creates a low switching cost, means that it is easy for customers to switch from apple to
other brands, based on price, funcion, accessibility, network and related concerns.

2. Bargaining power of buyers or customers : STRONG

-Low switching cost = STRONG


-Small size of individual buyers = WEAK
-high buyer well informed about quality, prices and cost = STRONG

It is easy for customers to change brands, make them powerful in compelling companies like apple to
ensure customer satisfaction. On the other hand each buyer’s purchase is small compared to the
company’s total revenues. Moreover in digital era, people can get a detailed comparative information
about competing products features empowers buyer to shift from one provider to another.

3. Bargaining power of suppliers : WEAK

-Moderate to high number of suppliers = WEAK


-Moderate to high overall supply = WEAK
-High ratio of firm concentration to supplier concentration = WEAK

The global supply chain allows Apple to access many suppliers AROUND THE WORLD. High supply of
inputs makes individual suppliers weak in imposing their demands on firm like Apple. Also the ratio of
firm concentration to supplier concentration further limits suppliers power and influence in the industry.

4 Threat of substitutes or substitution : MODERATE


-Moderate to high availability of substitutes = MODERATE
-Moderate to high performance of substitutes = MODERATE
-Low buyer propensity to substitute = LOW

Some substitutes to Apple products are readily available in the market. For example instead of iphone X,
people could buy s10. However their strong brand, product convenience and advance function makes
many customer still loyal to apple products.

5. Threat of new entrants or new entry : Moderate

-High capital requirement = WEAK


-High economies of scale = STRONG
-Moderate to high customer brand preference = MODERATE
-High cost of brand development = MODERATE
-Capacity of potential new entrants = MODERATE

Establishing a business to compete against firm like Apple requires high capitalization also it is extremely
costly to develop a strong brand to compete against large companies like apple. There are large firms
with the financial capacity to enter the market. For example Asus ROG phone and Google Nexus. These
examples shows that there are large companies that have the potential to directly compete against
apple. Thus, the overall threat of new entry is moderate, apple must maintain its competitive advantage
through innovation and marketing to remain strong against new entrants moderate competitive forces

You might also like