Five-Force Analysis Personal Computer

In: Computers and Technology

Submitted By Montse
Words 323
Pages 2
Michael E. Porter explains in his "How Competitive Forces Shape Strategy" that the state of competition in an industry depends on five basic forces: new entrants, suppliers, buyers, substitutes, and industry competitors. In this paper, I analyzed the competition in the personal computer (PC) industry using Porter's Five-Force Analysis.

1. Buyers (strong)

Buyers of personal computers are businesses, governments, educational institutions, and individuals. Large businesses, governments, and schools, which buy computers in large volumes, have the power to bargain on price, quality and service. Personal computer buyers are price-sensitive.
However, buyers have less power when the switching costs and brand-loyalties are high. Thus, PC manufacturers can reduce a threat of buyer power by differentiating their products. An example is Apple Computer. Apple's unique operation system and its computers specifically targeted to publishing and designing industry prevent their buyers from switching to competitors' products. Its sleek product design represented by iMac and iBook also acquired many fans and increased brand-loyalty. But, despite several ways in which manufacturers have differentiated their products and found ways to increase switching costs, customers still see units as very similar and thus choose primarily on price.

2. Suppliers (Moderate)

Components for manufacturing personal computers are the microprocessor, motherboard, memory storage, and peripherals such as monitor, keyboard, or mouse, along with bundled software.
Most of the components are highly standardized and widely available from a large number of suppliers. Thus, suppliers of those similar components do not have much market power vis-à-vis the PC industry. However, software makers hold significant power compared to PC makers that want to sell their computers with preinstalled software. For…...

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