Question

If Apple and Samsung merge,describe each of the five forces in Porter's five forces model and discuss how they affected the two organizations.

(Apply Porter’s Five Forces model to mobile phone industry to justify you answer.)

Answer 1

Answer:

Porter’s five force model for Apple and Samsung merger:

1. Industry rivalry: since apple enjoys the best technology and is considered to be the technological leader and Samsung being the leader of market share in the mobile phone industry, the confidence of the rivals of the both the company will fall down severely as a result of the merger.

2. Threat of new entrants: since, Apple and Samsung are the leader in their respective fields and are leader in terms of brand reputation; they would not possess any threat from the new entrants if they would merge.

3. Threat of substitute: Samsung is considered to be the major substitute for the mobile phones of Apple in the global market. With the merger of both the companies, the threat of substitute will be minimum for both the companies or it may be certainly eliminated after merger of both the enterprise.

4. Bargaining power of suppliers: since both the companies are technologically updated, there is no need to outsource the production of any of the components of the mobile phone to any of the third party. However, the basic components that are required for manufacturing the premium components would be ordered from the suppliers. Since, there is large number of suppliers who would want to serve the merged company; bargaining power of the suppliers would be minimum.

5. Bargaining power of buyers: as there is no scope of substitute, given the technology of the products of the merged company, bargaining power of the buyer will be very low.