Porter's Five Forces for Apple

Today I will take a look at Apple by implicating Porter’s five forces model. The Five Forces Model is a useful tool for understanding where power lies in a business situation. It purposes analyzing how the ability of a firm to generate or maintain a competitive advantage. The five forces are included threat of new entry, competitive rivalry, threat of substitution, suppliers power, and buyers power.

For the threat of entry, it is quite low as they put huge effort in research and development. Each product is very unique feature compare to same product that produced by other companies. Also, they have found a way to continuously differentiate its products from its rivals. They also have such wide-spread production that it can produce at a lower cost due to its economies of scale.

On the other hand, they do not have to worry too much about the threat of rivals. For instance, in mobile phone market, once Apple introduced iPhone, it quickly rose to the top and gained the advantage on rivals like Samsung. It is because Apple is used a separate system which is iOS, while all the other companies such as HTC and SONY are using android. In addition, they have their own apps like itunes and siri. They are offering something special to the buyers.

For the threat of substitutes, there is nothing can replace for a smart phone or computer. The next threat, the threat of suppliers, is also not so severe. They have a strong vertical integration so they do not rely on the third supplier so much. But they announced that they will use Intel” so they need to fight against with other competitors.

The final force, the threat of buyers, is really vital threat to Apple. Apples products are unique and differentiated, illustrating the power of buyers is lower.  Their target customers are emphasized on quality so they are willing to pay for a higher price. They has developed a high brand loyalty, as a result, the buyers will tend to return and purchase their products.