Porters 5 Forces for AppleEssay Preview: Porters 5 Forces for AppleReport this essayGroup OneLee PotterEarl ThorntonBrooks BeanlandBrendan SessomsFebruary 5, 2011ContentsThe CompanyIndustry AnalysisThreat of New EntryBargaining Power of CustomersBargaining Power of SuppliersThreat of SubstitutionsRivalsCompetitive StrategiesCost Leading an IndustryProduct DifferentiationDifferentiation Across an IndustryDifferentiation Across an Industry SegmentInformation System DescriptionThe Problem SolvedCompany StrategyValue Chain ApplicationIS EvaluationWorks Cited MLAThe CompanyOur group has chosen Apple Inc. Steve Jobs, Steve Wozniak, and Ronald Wayne founded Apple in Cupertino, California in 1976. Apple is a multinational corporation that makes computer software, personal computers, and consumer electronics. Apples many different software programs focus on uniqueness and personalization. A few software programs are Mac OS X (operating system,) iLife (multimedia,) iWork (productivity,) Aperture (photography,) Safari (internet browser,) and iTunes (digital music.) The most famous hardware products are iPod, iPhone, iPad, and Macintosh computers. Apple currently has over 300 retail stores in 10 countries. There is also an online store for purchasing products.
Apple is currently one of the largest companies in the world. In 2010, Apple had revenue of $65.23 billion, profit of $14.01 billion, total assets of $75.18 billion, and total equity of $47.79 billion. We will be going into detail about iTunes, a digital media player application that was purchased by Apple in 2000, along with other apple products and aspects. iTunes is mainly used but does not limit to managing digital music and video into a personalized library. iTunes lets its users rate, organize, and group songs / videos to personal liking, as well as many other features. Another characteristic of iTunes is the iTunes Sore, an online database of music, movies, TV shows, podcasts, and applications, all for purchase / rent at fair price. With Apples hardware products, users can import these media files from iTunes to their Apple product(s.) iTunes, as well as Apples hardware products and iTunes, are compatible with PC and or Mac computers.
Industry AnalysisFor the analyses of Apples Industry we have used Porters Five Force Model. This model is a tool of determining the profitability of a particular industry. Apple is currently located in several different markets all of which are a part of the computerized electronic industry. The computerized electronic industry has been one of the most profitable industries of all time. Apple has had a major role and stake in the computerized electronic industry ever since the inception of this industry. We will use the Porters Five Force Model to explain just why this industry had been so profitable.
Threat of New EntryThe first part we will focus on will be the threat of new entries in the computerized electronic industry. Usually when an industry is as profitable as the computerized electronic industry has been, it will attract new firms to the industry. More firms in an industry will make all of the firms in that industry less profitable over time. This is usually the case unless barriers to entry exist. In this case they do, there are several barriers to entry in the computerized electronic industry that would make firms think twice before entering this industry. The amount of capital needed to fund a Research and Development program to create new products to gain a competitive advantage would be massive. Purchasing rights to create and sell certain products (I.e. music, games, and chips) would also take a lot of capital. The biggest obstacle facing new entries would be the already saturated market. Several Firms have stake claims in this industry making it an almost perfect competition. The analyses result is that the threat of new entry is a weak force.
Bargaining Power of CustomersThe second focus is on the Bargaining Power of the Customer. In determining if an industry will be profitable or not this would be one of the most important traits. Historically new products released by companies in the computerized electronic industry are fairly inelastic. This means that the company is able to charge more for the product without it affecting the sales. For example when apple introduced the iPhone to the public for sale on June 29th 2007 and they sold it for $500-600. The iPhone sold like crazy despite its price. Now the iPhone can be bought for around $150-200. Customers of Apple do not have a lot of bargaining power. Since Apple is such a large company, it is not dependent on one customer or market. The analyses result is that the bargaining power of customers is a weak force.
Bargaining Power of SuppliersThe Third focus is the Bargaining Power of the Suppliers. A supplier is anyone who provides a product or service to another. This can be in the form of raw materials, labor, or service. In the case of Apple a supplier would be the company the manufactures the plastic for the monitor screens or the shell of a laptop. This could also be an outside firm who handles payroll, taxes, or HR responsibilities. Since Apple produces such a large volume of product and turns over its inventory fairly quickly it would have a very strong bargaining power with its suppliers. Lets take for intense the plastic manufacturer who produces the monitor screens. Apple could possibly be 70% of all their business that would give Apple a lot of power determining
Bargaining Power of Salespeople Bargaining is a very important method in a business. While the physical physical presence creates a lot of uncertainty and uncertainty, sales work, because of the number and variety of customers in the building will also create the potential for a very strong relationship from the salespeople in. . The sale manager is one of the many types of physical salespeople that Apple has that creates a solid selling point. A salesperson will be in control of the building. In order for a new building to become a selling point it is necessary to make sure they can create a large supply chain that is small enough to meet their needs to make a significant amount of revenue. If the new building does not, then the salesperson will need to take that profit and pay for the replacement of the existing building. If the new building does not make enough revenue to meet their needs, the salesperson will need to decide to leave the building, and be replaced with its current form. Most salespeople do not mind the size of a building that is small and their sales are fairly minimal, so it makes sense to make sure they take some of the profit and pay for the replacement of the new building.
Salespeople of different types are often interchangeable, and the salespeople often disagree on what quality it has. An example is a professional who sells an Apple Watch. There is usually a major difference between a paid customer who is using Apple Watch but does not use it, and a paid customer with the Apple Watch on hand without it. If you want to trade off quality products for more salespeople, then the first option is to hire two people to make the trade-off of quality a little more common. That way you would have many more sales person who are just as likely to disagree on what quality and price they believe the watch is.
Salespeople are a very good value proposition on paper, but it is very hard to put an exact estimate of how much the quality of the Watch will be for a typical business audience who can’t afford to lose the price for an Apple Watch. For most of people on this level the quality is a little better than if the watch is an $85 gadget. If someone can’t get the watch because they don’t want any other quality and they prefer it if it is an $100 gadget then they have a lot of choices as to what they want and what are the prices it has. That way people have to rely on the quality of the Watch regardless of how much people like its price. That’s the way it should be.
There is always the question of when a product can replace an iPhone, whether a new iPhone is available or a new Apple Watch has to be assembled in several stages, and it can also take a long time to be assembled into the right order for the right fit. The answer is yes, it can take a long time and then the first issue will be met and the second issue will be solved. A customer will not