Apple Incorporation is a multinational Corporation that makes and sells computer software, personal computers, and consumer electronics. The Corporation is located in America, and it is headquartered in Cupertino, in the state of California. It operates the personal computer industry, which keeps pace with the emerging technological issues. In the personal computers industry, Apple Inc faces competition from other Corporations such as Dell Inc, Hewlett-Packard Company, Alienware Inc, and Microsoft Inc. Research asserts that Apple Inc deals with competitors successfully by formulating effective marketing plans that are used to achieve the set objectives. The industry could be analyzed using the Porter’s five forces, which include supplier power, threat of new entrants, threat of substitutes, buyer power, and the degree of rivalry. According to Internet Center (2010), these forces are significant in the analysis of the industry in which Apple operates because they provide an in depth understanding of any possible changes.
This paper utilizes the Porter’s five forces to analyze the personal computer industry in which Apple Inc operates.
Supplier power refers to the market values of inputs in the market. Research points out that suppliers are vital in the personal computer industry as they provide the required materials for designing computers and other devices that are sold in different markets. The industry requires that suppliers must meet the highest required standards of goods and services before being admitted by any Company. This is to ensure that the final products are of the best quality possible in order to survive the tough completion in the market. Research asserts that suppliers could also switch off from one company to another at will. Suppliers are supposed to keep pace with the dynamics of the industry in order to ensure that they provide the most current materials that would be used in the design of computers and other devices. Aaker (2011) points out that suppliers are significant, in the industry as they ensure that there is continued supply of computers to the market. The industry treats all the suppliers equally as most Companies including Apple Inc allow suppliers to tender. Successful suppliers are then screened and selected upon meeting the required terms and conditions of the industry. Research reports indicate that suppliers switching costs relative to those of individual Companies are significant in order to ensure that there are no losses emanating from the abrupt movement of suppliers. Suppliers are given maximum autonomy in the industry as they decide on the Company to work with independently. This ensures that there is continued supply of materials that are within the required industry standards.
The threat of new entrants is inevitable in the in the industry. The industry is open, and any new Company wishing to join the market can do so without being subjected to barriers. Research points out that any Company wishing to join the industry must meet the standards that are required for effective operation in the personal computer industry. Müller (2011) asserts that new entrants must ensure that they have the required level of technology that would facilitate the design of the most current computers and other devices. Any new Company wishing to join personal computers industry must adhere to other terms and conditions such as legality. The entry of new Companies into the industry are regulated by global governments in order to ensure that only those new Companies that have proper finances and the required level of operating technology are allowed into the industry. Apple Inc is one of the leaders in the industry and is always cautious about the new Companies as they pose stiff competition. Research point out that the absence of barriers to entry into the industry emanates from the fact that all Companies apply similar technology in the design of computers and other devices. This opens up the market, as there are not complications on the part of the new entrants into the market. The personal computer industry is open to the entry of new Companies hence increasing the level of competition in the market.
The threat of substitutes is a conspicuous characteristic in the market. Substitutes are products and services that are offered by other Companies and serve the same purpose. Research asserts that the computer industry is composed of many industries that offer similar products. The products are produced with the use of similar technology hence they have the capability of satisfying similar needs. Apple incorporation produces computers and other devices that are also produced by other Companies such as Dell Inc. Mohr, Sengupta, & Slater (2009) intimate that any change in the price of a product could lead to consumers switching to cheaper substitutes. This is with the aim of ensuring that they satisfy their needs at the cheapest costs possible. According to Hurwitz (2011), the threat of substitutes emanates from the difference in the prices of computers offered by different Companies in the markets. Research indicates that the threat of substitutes in the industry is limited by consumer loyalty to the products offered by the various Companies in the industry. In cases where consumers are used to the products of a particular Company, then the rise in prices would not affect the demand of the product. The industry has many Companies that produce similar products hence increasing the threat of substitutes. The threat of substitutes in the industry is countered by staying within the price levels manageable by customers. This will limit the rate of consumer switching to the products offered by other Companies.
The power of buyers refers to the impact that buyers have to individual industries. Research asserts that buyers are vital in the computer industry as they determine the profitability and survival of the Companies in the industries. Consumers could be other Companies or individuals and should be treated with due diligence. The different Companies that operate in the computer industry are obligated to respect their consumers and address any need arising in order to ensure that satisfaction is achieved. Some of the established Companies like Apple Inc have dedicated consumers who would always buy their products hence ensuring that there is increased profitability and survival. Research points out that consumers are one of the key stakeholders in the industry and any decision made must be aimed at addressing the different consumer needs. Consumers are also influenced by the prices of similar products in the market. O’Grady (2008) asserts that most consumers in the industry prefer Companies that offer cheaper and quality products. Thus, a Company that prices its products at prices that exceed the existing market price would likely have to lose most of its consumers. In the industry, quality and the warranties offered by different Companies influence the loyalty of consumers. Therefore, Companies must ensure that they treat their consumers with the required levels of preference in order to ensure that they achieve a competitive advantage.
The degree of rivalry refers to the stiff competition posed by other Companies in the industry. The computer industry is composed of many Companies that offer stiff competition to each other. Research points out that most of the Companies in the industry compete in terms of technology and the prices of products. The industry involves the use of advanced technology that must be embraced by any Company wishing to be successful. Mohr, Sengupta, & Slater (2009) point out that the adoption of technology ensures that quality products are produced hence reducing the level of competition emanating from the production of poor quality products. Research asserts that the level of competition in the industry is extremely high due to the large number of players. Companies that do not adopt the current standards in the industry are not able to cope and risk being eliminated from the market. The prices of the products offered by different Companies lead to stiff Competition for consumers in the industry. Those Companies that offer fair prices benefit from this type of competition as they acquire more customers hence customer loyalty. In order for any Company to overcome the competition and survive, it is vital for it to adjust as fast as possible. Adjustment and adaptability are crucial for any Company wishing to survive the intense levels of competition and achieve maximum profitability.
In conclusion, Apple Inc is a multinational Corporation found in America. It is headquartered in Cupertino, in the state of California, and is specialized in the design and sell of computers, consumer electronics, and software. The Company operates in the personal computer industry that could be analyzed using Porter’s five forces. The power of suppliers determines the availability of products from each industry as they play a significant part in the provision of materials required for the manufacture of final products. The industry does not have barriers to the entry of new firms, which meet the required industry market standards. This heightens the level of competition in the industry. In addition, the threat of substitute products is a conspicuous characteristic in the industry because most of the Companies produce products that satisfy similar needs. The power of consumers also determines the profitability of different Companies as their buying habits keep changing. Rivalry from other established competitors also influences the industry. A company would only be successful in the industry in case it is able to make the appropriate changes as they occur in the industry.