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    Porter's Five Forces Analysis - Technology Sector

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    Dishant Khaneja
    The document analyzes Porter's Five Forces for the technology sector. It finds that buyers have high bargaining power due to many options and low switching costs. Supplier power is low due to standardization. Rivalry among existing competitors is intense for conventional services due to commoditization, while new entrants pose a threat due to potential for disruption and attractiveness of the growing market. Substitute threats are also low as digital services are becoming essential for many industries.

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    Porter's Five Forces Analysis - Technology Sector

    Uploaded by

    Dishant Khaneja
    351 views2 pages
    The document analyzes Porter's Five Forces for the technology sector. It finds that buyers have high bargaining power due to many options and low switching costs. Supplier power is low due to standardization. Rivalry among existing competitors is intense for conventional services due to commoditization, while new entrants pose a threat due to potential for disruption and attractiveness of the growing market. Substitute threats are also low as digital services are becoming essential for many industries.

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    Porter’s Five Forces Analysis - Technology Sector

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    The document analyzes Porter's Five Forces for the technology sector. It finds that buyers have high bargaining power due to many options and low switching costs. Supplier power is low due to standardization. Rivalry among existing competitors is intense for conventional services due to commoditization, while new entrants pose a threat due to potential for disruption and attractiveness of the growing market. Substitute threats are also low as digital services are becoming essential for many industries.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    351 views2 pages

    Porter's Five Forces Analysis - Technology Sector

    Uploaded by

    Dishant Khaneja
    The document analyzes Porter's Five Forces for the technology sector. It finds that buyers have high bargaining power due to many options and low switching costs. Supplier power is low due to standardization. Rivalry among existing competitors is intense for conventional services due to commoditization, while new entrants pose a threat due to potential for disruption and attractiveness of the growing market. Substitute threats are also low as digital services are becoming essential for many industries.

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    Porter’s Five Forces Analysis

    Technology Sector

    Bargaining Power of Buyers


    ► Mostly include customers in the form of buyers.
    ► Large number of players: national + international
    ► Lower switching cost because of availability of large number of players in the market
    ► This means that it has leads to higher power being concentrated in the hands of the buyers
    which means that they are the price setters influencing demand of product/ service
    ► The only way to retain the buyers is by offering differentiated services (especially
    influencing their post-purchase behavior.

    Bargaining Power of Suppliers


    ► Power of suppliers is very low because of high-standardization. For instance, consider the
    mobile market or the chip market which are pretty niche when it comes to the type of
    differentiation one is seeking in the technology needed.
    ► Existing relationships between the suppliers and the buyers makes it difficult for new
    suppliers to establish base.

    Rivalry among Existing Competitors


    ► IT industry is very concentrated, especially when it comes to big players like TCS and Infosys.
    These have established their base in such a manner that the entry barriers might be really
    high.
    ► There is intense competition for conventional IT services: Application Development &
    Maintenance, IT Infrastructure Management Services, Network Management Services,
    Data-center Services etc. leading therefore to commoditization.
    ► Similar types of services in the market leaves very little to differentiate based on these
    services.
    ► Products in this industry are well branded and tend to have a strong customer base.

    Threat of Substitutes Products


    ► From the perspective of the industry, and not any product in general, there is not much of a
    threat from substitute because there aren’t any as such.
    ► Digital dominance in the market is irreplaceable with more and more businesses going
    online. Car manufacturers, financial services are adopting to IT and tech at a very fast pace
    making it difficult to come up with a viable replacement in due time. Till that due time
    another consumer centric product would be rolled out in the market.
    ► Also, ITES industry is kind of irreplaceable at this point of demand with its demand growing
    up.
    Threat of New Entrants
    ► IT industry is ripe for disruption from the upstarts unless the existing incumbents keep on
    innovating.
    ► New tech in the market can appeal to an entirely new niche segment which was till now not
    catered to or a blue ocean entirely.
    ► Also, because of its continuous growth & profitability, regardless of the situation, it might
    attract a new entrant.
    ► Because of the risk of technological obsolescence and maturity of life cycle of a new
    product, new entrants can establish their base.

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