Essay on Porters 5 Force Analysis of Apple Inc

1757 Words Jan 28th, 2014 8 Pages
Apple Inc. specialises in development, design and marketing of computers, portable-digital music players and other didgital devices including iPad’s and mobile devices (IPhone). Apple Inc. are also involved in selling multiple supporting software, digital content, third party applications, networking software and services. Apple Inc. predominantly operate from their U.S headquarters in Cupertino, California and involves 72,800 employees (Forbes, 2013). Revenue for APPL in 2013 has risen from $155.97bn in 2012 to $170.87bn in 2013 (Market watch, 2013) which is a 9.6% increase.
The objective of the Porter’s 5 forces model is to identify and elucidate the current levels of competition existing with a market, by examining what the 5 forces
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“Rivalry in this industry is expressed by aggressive pricing policies, profound product innovation and design, online intensive marketing, direct selling, and afterscale services (Forbes, 2012) The Table below shows the current market cap Of Apple Inc. with its main competitor being Google Inc. Apple Inc. secures its market leadership by providing products and services with unique attributes using differentiation strategy. They also implement focus strategies such as instead of targeting business users, targeting consumer users with the IPhone.
Table 1 : Apple Inc.’s competitive rivalry within the industry

Source : Yahoo Finance, 2012

Bargaining power of buyers
Bragining power within the mobile market is very low to non existant due to the demand from customers for these pruducts. Consumers are willing to pay retail prices because they want the product, and it would be almost impossible to influence apple to reduce its pricing due to the diversity of its products over competitors. It is that product diversity that allows apple to charge high prices compared to its competitors (Nokia, Dell) who have were made slash their prices due to fierce competition within the industry. In addition, another reason of lower bargaining power of buyers is high switching cost for customers due to change of software or hardware (Griffin