Question

How did Apple Inc. use the porter five forces model strategies? Use examples to clarify.

Answer 1

APPLE Inc.

PORTER FIVE FORCE MODEL STRATEGY

1)bargaining power of buyers-( customer)

it is medium-

• the retailer may pressurize for lower prices and better terms.
• the consumer may reduce spending on the computer due to an economic slowdown
• end-users (customers) are mostly loyal.
• switching cost of an apple PC is high.
• PCs have a presence in the market place.
• threats of switching to Wintel platforms always present.

2)The bargaining power of suppliers

from the supplier side is a low

• supplier of processor and computer memory.
• sources of music
• suppliers compete among themselves and therefore have no bargaining power.

3)threats of substitute products and services.

threat is medium

• PCs are available in different configurations, and price ranges.
• PCs represent above 90% market.
• huge network externalities for PCs.
• no MAC clone available, no competing product with the quality provided in mac clone present in a market.
• some negative threats-
• satellite radio for music.
• alternative means of acquiring music( DVDs)

4)threats of new entrants-

threats from new entrants are low.

• high capital investment commoditized market makes apple unique in the market.
• substantial dominance of low-cost scale players( HP, DELL)
• on-demand online services.
• new entrants with disruptive technology.

5)competitive rivalry

• competition to MAC OS X ( Linux)
• alternative sources of computer hardware(DELL, HP)
• NAPSTER, online music app