Five Forces Model

Five Forces Model: Apple

Grantham University

Five Forces Model: Apple

Use the internet to select a well-known company (examples: Ford, Nike or General Mills). Using the Five Forces model write at least five sentences describing what this company needs to take into consideration under each of the five forces.

Rivalry among existing competitors

Threat of new entrants

Threat of substitute products and services

The bargaining power of buyers

The bargaining power of suppliers

For this assignment, the well-known company I chose to use for my Five Force Model is Apple, Inc.

Rivalry among existing competitors:

Apple, Inc. has an established brand with loyal followers to their products. On the other hand, Apple has direct competition with companies like Google, HP, Samsung, Motorola, and LG, to name a few. These competitors are producing newer technology at a lower cost, which directly affects Apple’s market.

Threat of new entrants:

The likelihood of a new competitor in the same market as Apple is extremely low. Product branding, as well as the cost of establishing a technology business that is comparable in the Apple marketplace is extremely high.

Threat of substitute products and services:

The products that could be substituted for Apple products are obsolete. An example would be “a landline telephone that might be a substitute for owning an iPhone” (Maverick, 2015).

The bargaining power of buyers:

Apple must not take the relatively low cost of a buyer to switch to a competitor likely. Apple has the ability to absorb the loss of single buyers sporadically, but cannot lose buyers in groups without repercussions.

The bargaining power of suppliers:

The market is filled with potential suppliers of parts and suppliers in the technology industry. This gives suppliers very little bargaining power with Apple due to the fact that Apple can switch to different suppliers with ease and little to no price changes.

References

Maverick, J. (2015, November 10). Analyzing Porter’s Five Forces on Apple (AAPL). Retrieved from www.investopedia.com: http://www.investopedia.com/articles/investing/111015/analyzing-porters-five-forces-apple.asp