Buyers bargaining power-medium threat
The PC industry is vulnerable against the buyer’s bargaining power. This is however a medium threat. In the past years, clients have had more alternative options to personal computer. They include tablets, Smartphones and other handheld gadgets such as IPod. These devices have same capabilities as a PC.
What’s more, the gadgets are sleek, trendier and easily available in the market. With these in mind, they have in the recent years become increasingly popular making personal computers obsolete. Therefore, for the personal computer to compete with alternative devices, it must differentiate itself. By doing so, it will also regain its market share.
Bargaining power of suppliers- low threat
In the PC industry, suppliers can be grouped into three including software suppliers, hardware suppliers and service suppliers. The core of their services and products are standardized and they compete by focusing more on creating ideal or highly advanced products at an affordable price. This is done without making attempts to differentiate them.
Therefore, companies within PC industry are in a position to switch between their suppliers with ease. It is in the hands of a company and which method it is committed to that will in the end determine whether to utilize high or low end supplier or not.
With the quality of a computer being largely determined by their application and microprocessors systems, software and hardware suppliers within the industry play a significant role in product pricing. If a company is employing a high quality method, then higher prices can be expected based on what it is paying its suppliers. For instance, OS X from Apple is one of the best PC’s in the industry and this is reflected in the price of the product.
For service suppliers, there are different services that can be offered within the industry and they include tech support, internet and repair services. These suppliers mainly focus on relational and operational performance to enhance client satisfaction. They also provide a wide range of customer loyalty programs in an effort to lock in and expand their client base, while trying to achieve a competitive advantage over competitors in the market.
New entrants-low threat
PC market is currently dominated by 5 major forces and this is likely to discourage new entrants because the forces have a large market share. Therefore, there is a huge barrier to new entrants because a company has to make a huge investment in terms of research and development to develop quality and innovative products. There is also need to counter large startup costs for customer service, manufacturing and employees.
Threat of substitutes-high threat
Smartphone and tablet industries affect sales of personal computers. They have various major players and their products offer same benefits that PCs offer. As tablets and smartphones continue to be more popular, sales of PCs tend to decline.
Laptops and personal computers currently offer unique applications and are compatible with more software compared to tablets and smartphones. However, if these gadgets attain similar features, they will be all in one ideal alternatives to PCs.
Industry competitors-high threat
Personal computer industry is facing high competition from top manufacturers. They are all fighting for powerful and low cost gadgets and with the most efficient operating system. Companies specialize in different areas to increase competition among rivals especially on pricing.
Importance of Porter 5 Forces Industry Analysis of the Pc Industry
By using the Porters 5 forces model, the global personal computer industry can be efficiently analyzed to get a better understanding of its market status. The analysis also helps it determining the success of the industry based on its driving forces. This is based on the fact that the five forces have a major impact on decision making. Business persons can therefore, use the analysis to determine whether to enter a new market or to invest further into personal computer market.