[sm-1] group-4_apple case porter analysis

1A. THE THREAT OF RIVALRY

Sl. No.Ind. Attractiveness

LOW MED HIGH 1 2 31 Number of Competitors 12 Industry Growth3 Fixed Costs/ Storage Costs 34 Differentiation 35 Switching Costs 16 Openness of Terms of Sale 37 Excess Capacity 28 Strategic Stakes 1

*HerfindahlHirschman Index1B. THE THREAT OF RIVALRY- BARRIERS TO EXIT


LOW MED HIGH 1 2 31 Asset Specialization 1

Branded PC Industry Analysis Section E Group 4

Naveen[PGP29241] | Pankaj Nagar [PGP29245] | Ankur [PGP29256]Sumeet [PGP29257]| Tarun [PGP29258]| Shantanu [PGP29270]

2 Fixed Cost of Exit 13 Govt. Restrictions

AVERAGE 2.1818181818

2. THE THREAT OF ENTRY


LOW MED HIGH 1 2 31 Economies of Scale2 Product Differentiation3 Brand Identity4 Customer Switching Cost5 Access to Channels 36 Capital Requirement7 Access to Technology 28 Access to Raw Materials 29 Govt. Policy/ Protection 2

AVERAGE 3.6666666667

3. THE BARGAINING POWER OF BUYERS


LOW MED HIGH 1 2 31 Number of Buyers 32 Availability of Substitutes3 Switching Costs 14 Buyers' Threat of Backward Integration5 Industry's Threat of Forward Integration 36 Contribution to Quality 27 Contribution to Cost 28 Buyers' Profitability 2

AVERAGE 2.75

4. THE BARGAINING POWER OF SUPPLIERS


LOW MED HIGH 1 2 31 Number of Suppliers 32 Availability of Substitutes 13 Switching Cost 24 Suppliers' Threat of Forward Integration 35 Industry's Threat of Backward Integration 16 Contribution to Quality 1

7 Contribution to Cost 28 Industry's Importance to Supplier

AVERAGE 2.125

5. THE THREAT OF SUBSTITUTES


LOW MED HIGH 1 2 31 Availability of Close Substitutes2 Switching Cost3 substitutes' Price Value 34 Profitability of Producers of Substitutes 3

AVERAGE 3.50

GOVT ACTIONS


LOW MED HIGH 1 2 31 Industry Protection2 Industry Regulations3 Customs & Tariff Restrictions Abroad

AVERAGE 5.00

OVERALL AVERAGE ATTRACTIVENESS 3.20

1A. THE THREAT OF RIVALRY

Ind. Attractiveness4 5

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1B. THE THREAT OF RIVALRY- BARRIERS TO EXITInd. Attractiveness

4 5



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54

55

5


4

5


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555

Assumptions/ RemarksCR(4)=49.1%; HP, Dell, IBM, Lenovo, Acer major competitors; Apple's Share: 2.6%10-15% overall growth; Mostly in Asia & Emerging Market; US (3%)PC Manufacturers need to invest in facilities but can oursource as well; R&D expendituresPC- Commodity now; But All vendors have been able to differentiate themselves on some parameterLow switching (many competitors, many substitutes), Apple high (Brand loyal, SA with AT&T)Apple has unigue terms in iTunes, iPhones, Mac SoftwaresEconomies of scale require large increments in capacityCosts associated with exisiting the market are high; Hence strategic stakes are high

Assumptions/ RemarksApple produce specialized product, All players have unique products so can't be sold back



High fixed costNo Governement Restrictions

Assumptions/ RemarksEconomies of scale is high; Threat of Entry become low and hence attractiveness is HighProduct Differentiation is high; Customer Identify the products of major brandsBrand Identification is high for major players and customer loyalty is also there in case of Apple Rely on suppliers hence the switching cost is high; Intel Leaders have already captured the major distribution channels like AT&T, verizonHigh R&D investment to produce diffrentiated productsTechnology know-how is available to all players in the marketRaw Material can be made easilty available given economies of scale on the suplier sideNo Govt restrictions on new players; Threat of Entry High

Assumptions/ RemarksNo of Buyers has increased; Led to increase in bargaining power of corporate clientsNo major substitutes for Branded PCs. Buyers can switch easily between brands.Huge Capital and R&D requirement in the industry so no threatMedium Buyers demand quality of a particular typeCompetition has pushed the prices low, Buyers demand low pricesBuyers will be price sensitive and hence will look for lower prices

High Bargaining Power

Assumptions/ RemarksMany suppliers for keyboard,drives etc but only few for micro processor and OSStandardised products; Substitutes are not availableSwitching from one supplier to another for key components will be costlyHuge Capital and R&D requirement in the industry so no threatEstablished players in high value raw material like OS and Micro ProcessorInnovation by suppliers such as Intel contribute heavily to the product quality

Suppliers provide parts which are expensive and form a major part of the products costsPC Industry is very important to the supplier

Assumptions/ RemarksNo major substitutes to PCs available;Switching to any substitute of PC will involve huge investments N.A.N.A.

Assumptions/ RemarksNo such barriersNo such barriersNo such barriers

Porter's Analysis- Apple Case

[sm-1] group-4_apple case porter analysis

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