Conduct the Following Analysis please revise the words 1 P

Conduct the Following Analysis: ( please revise the words )

1) Porter’s Five Forces on the PC industry

2) Place key findings from industry analysis into a SWOT

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.

Solution

PORTERS FIVE FORCES OF PC INDUSTRY

Porters five forces have been formulated to analyze the structure of an industry and the various strategies adopted by the company and industry in shaping the market. According to Porter, there are five forces that play a vital role in shaping industries and markets. They are

Threat of new potential entrants

The entry of another PC manufacturer is very slim due to the existing entry barriers in the industry. Two such barriers that make the entry of another PC manufacturer are the cost of entry and the distribution. It is also predicted by the experts that seventy percent of the global market will be controlled by the top five vendors in the PC market which are Dell, HP, Apple, Acer and Sony.

Threat of substitute products

The entry of new and substitute products is posing a high and substantial amount of threat to the PC industry. Products like tablets, smart phones and I Pods which have the similar features, functions and capabilities as that of a PC are putting the industry and market growth at stake, even which is a high threat to the companies. Therefore, the PC industry players should resort to product differentiation strategies and should focus more on research and development to beat the light and sleek alternate gadgets. This will help the industry to some extend to retain their market share.

The competition faced from the substitute products could be the major reason for the decrease in earnings at some point of times. The existing players of PC industry have to devise a differential kind of strategy to challenge the threat of the substitute products. Otherwise, these substitutes can limit the growth of the industry by setting a sealing price on the products. It can be found that the industry has quite a few substitute products, which determine the potential returns for the companies by limiting the upper limit of the prices, thus decreasing the revenue and earning potential of the companies.

Bargaining power of suppliers            

The PC industry suppliers could be categorized into three mainly software suppliers, hardware suppliers and service suppliers. These product and services follow a standardized and optimum product features and production. These suppliers compete each other by producing high quality and advanced products. Therefore, the bargaining power of suppliers is low in PC industry. The industry players of PC industry can switch between players at a low cost by utilizing the low bargaining power of the suppliers. This makes the suppliers less powerful in the PC industry so that they won’t be able to increase the price of their products. Moreover, suppliers will be able to provide quality products with affordable cost.

Bargaining power of buyers

PC industry have a high bargaining power. Since there at least four to five known competitors and there is a large pool of buyers with high bargaining power. The existence of substitutes like tablets, smartphones and IPod will enable buyers to bargain with companies. In order to prevent such situations, companies have to be unique in their operations and product features. Otherwise it will affect the marginal profit earning of the companies.

Rivalry among competitors

The major existing competitors of PC industry are Dell, Hewlett Packard, Apple, Acer and Sony. These players are competing with each other to produce PCs with highly efficient operating systems. Companies are resorting to various researches and development and have tied up with software companies to make PCs more compatible with advanced and highly efficient softwares and applications. These strategies make the industry highly competitive. Also, companies should adopt a differentiation pricing strategy to sustain in the market while producing high quality products. This can be the winning strategy of the companies to beat the competitors and all the players are implementing this strategy.

Considering its strategy for improving its products and innovative ideas in research and development, there is no doubt that PC industry will be able to maintain its leadership in technology products.

SWOT ANALYSIS FROM MAJOR FINDINGS

STRENGTHS

The research and development of the products and the potential to improve the PCs. The skills of technical employees are strength to companies.

WEAKNESS

The high cost required for the research and development makes the entry into the industry difficult of the new players. Also, the costs associated with customer service, production and employees makes the entry difficult for start-up companies.

OPPORTUNITIES

Opportunity to invest in research and development to make high quality and differentiating products. The low bargaining power of the suppliers enable the companies to choose from a number of suppliers in hardware, software and service suppliers.

THREATS

High competition of the industry. As a result of the high competition, the high bargaining power of the buyers could be posing a great threat to the PC industry. Also, the entry of substitute products like tablets, smartphones and I Pods are posing a great threat to the PC industry.