Porter’s 5 forces Model

And Porter’s Value Chain for

Apple

1. Porter’s 5 forces Model

Purpose of Porter’s 5 Forces Model

• Analyzing how the ability of a firm to generate or maintain a competitive advantage

Apple Porter’s 5 forces Model

2

Rivalry•The Company

•Competing companies

1

Threats of new Entrants

5

Buyer Power

3

Threats of Subtitutes Products or Services

4

Supplier Power

• Apple dominates consumer electronics industry

• Put relentless efforts on R&D

• Each of the company’s products is unique

• Threat of new entrants is very low due to apple is continously differentiate its products from its rivals.

• Apple has wide spread production that it can produce at a lower cost due to

Threats of new Entrants

• Not a threat to apple due to introduction of iphone and ipad.

• The rivals put the relentless effort such as R&D to introduce new product to ensure that they will be always the first and difference, but again apple has no issue with differences. They always be number 1 to introduce products like iphone(touch screen concept), ipad(the tablet) etc.

Rivals

• Examples of Subtitutes :• Ipod samsung mp3 player / Sony MP3 player• Ipad samsung tab• Iphonesamsung galaxy note / sony ericcson / nokia

• Apple achieves economies of scales, enabling it to produce in lower cost

• Apple market better than the competitor

• Apple brand is well known and recognised brand

Threats of Substitutes Products or Services

• The supplier has some power due to they have the ability to supply the unique material to apple in the way for apple to produce the unique products

Supplier Power

• Not a threat to apple.• Apple has millions of buyers (individual and large corporations)• They have the ability to increase its prices of some products due to unique and well

differentiated.• Apple need to ensure that the price increase is not too drastic

Buyer Power

References: http://lloyd7160.blogspot.com/2013/02/apple-and-five-forces-model.html

2. Porter’s Value Chain

- Components generally obtained from multiple sources.

- Hardware products are manufactured by outsourcing partner primary in Asia e.g. Foxconn.

- Delegate raw materials acquisition : Works with its OEM partners to delegate the raw materials acquisition process but provides some supervision for quality control purpose

- Automated receiving systems : Implemented sophisticated automated receiving systems to speed up the receiving process and reduce facility foot printand storage space requirement

Inbound Logistic

- Elimination of toxic substances in Apple products. Every product is free of BFRsand other harmful toxins, Apple have also qualified thousands of components to be free of elemental bromine and chlorine.

- Products are designed highly recyclable aluminum enclosure.

- Utilize original equipment manufacturers (OEM) ’s economies of scale

- Apple outsources production to third party OEM partners to utilize their economies of scale while removing the burden of production management from the firm.

Operations

- Apple used variety of direct and indirect distribution channel, such as retail stores, online stores, 3rd party cellular network carriers, whole salers, retailers and value added resellers.

- Continue to expand and improve its distribution capacities by expanding the number of its own retail stores worldwide in order to ensure a high quality buying experience for its product

- Economical packing : Employed teams of design and engineering experts who develop product packaging that’s slim and light yet protective. Efficientpackaging design not only reduces materials and waste, it also helps reduce the emissions produced during transportation.

Outbound Logistic

• Reasonable Pricing : Introduce their product with reasonable price

• Brand Loyalty : Always make it as a different products compared to others

• Retail Outlets : Allow the customer easy to obtain the products.

Sales and Marketing

- Customer service: Phone customer service- Information of product : www.apple.com- Support of product :http://www.apple.com/my/support/

Servicing