Introduction
Apple Inc. is a multinational technology company that is mainly based in the United States. The company has its headquarters in Cupertino, in California, and it has also been in the market for quite some time now. The major areas that Apple Inc. plays a role in are designing, developing, and selling the products to its customers all across the world. Among the things that Apple Inc. deals with include online services, consumer electronics, and computer software. Porter’s five forces model is a major technique mainly employed when it comes to the competitive analysis of any business and is a great way; it helps a lot in understanding how the market behaves and what it offers to the people. It is important in making the company focus on doing even great to attract more customers. Also, in addition to that, it is clear that the model is essential when it comes to understanding and determining the forces that will help shape the industry’s competition. This is essential as it will help the company analyze the issues that affect the market and then help come up with a better strategy that will be useful in the company. It also plays a role in maintaining the competitive environment that will in a great way help in the realization of profits. The strategy of Apple Inc. is mainly based upon the need to counter the external business forces (Perera, 2020).
Porter’s five forces model
Competitive rivalry
Competition is expected in the market and beating the competitors in the market deserves more hard work and commitment towards establishing strong strategies. Apple is faced with a strong force of competitive rivalry; Apple’s influence is based on the firm’s high aggressiveness, products’ low differentiation, and a lower switching cost, which presents a strong force. Among the companies giving Apple Inc., the strong competition includes Microsoft, Dell, and Samsung. Porter’s five forces model establishes a strong force created by this situation, making it simple for consumers to switch to rivals in the market, hence stiff competition, which is a crucial consideration in Apple’s strategic management (50MINUTES, 2015).
The bargaining power of consumers
This is a strong aspect in impacting Apple’s business. Apple’s strong buyers’ power is based on low switching costs, individual buyers’ small size, and higher levels of buyer information. Buyers’ information is very important in helping attract more clients into purchasing Apple products. Due to the quality of products that Apple Inc. comes up with, it is clear that they have been able to acquire more customers through their advertising and also market from those who have already used the Apple products. The Porter five forces model establishes the impact of purchasing decisions of buyers affect businesses. Apple hence should ensure the inclusion of buyers’ purchasing power in their strategic plans (Miller et al., 2011).
The bargaining power of suppliers
Apple Inc. is faced with a weak force of suppliers’ power of bargaining; this is based on suppliers’ number that is moderate to high, overall moderate to high supply and firm concentration high ratio to supplier concentration which all presents a weak force. Porter’s five forces model establishes suppliers’ influence in imposing demands on the organizations and their competitors. Hence supplier’s bargaining power is a minor concern in developing strategies of Apple Inc (Hasan, 2013).
The threat of new entrants
With the growing technology, the market is saturated with most of the things that Apple is making. In addition to that, other new products are coming up most of the time, and this is a major challenge that Apple Inc. must address in making it clear the company has made sure that they are up to date with the upgrade of their electronics. This has made them stay in the market because they have the needed skills to keep them moving. Apple Inc. is faced with a moderate force of new entrant’s threat; this is based on high capital intensity and high brand development costs, which presents a weak force, and potential new entrants’ capacity, which presents a strong force. Porter’s five forces model establishes the possibility and effect of new market entrants; hence Apple should engage in marketing and innovation to maintain a competitive advantage over new market entrants (Walder, 2017).
The threat of substitute products or services
Apple Inc. is faced with a weak force of substitution, which is based on substitutes moderate to high availability, which presents a moderate force and substitute’s low performance plus low substitute propensity of buyers. Porter’s five forces model establishes substitutes’ strength in customer attraction. Hence apple doesn’t need substitute prioritizing, especially in management decisions in business processes such as product development and designing, positioning of the market, and marketing (Perera, 2020).
References
50MINUTES. (2015). Porter’s Five Forces: Understand competitive forces and stay ahead of the competition. 50 Minutes.
Hasan, M. R. (2013). Apple Inc. – An analysis: PESTEL analysis, porter’s 5 forces analysis, SWOT analysis, comprehensive analysis of financial ratios, and comprehensive analysis of share performance of Apple Inc. GRIN Verlag.
Miller, F. P., Vandome, A. F., & John, M. (2011). undefined. Alphascript Publishing. Perera, R. (2020). Understanding Porter’s Five Forces analysis. Nerdynaut.
Walder, J. (2017). undefined. Createspace Independent Publishing Platform.
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