Xiaomi and Oppo have also maintained competitive prices to retain their market share. Apple has also grown its investment into R&D during recent years. In Apple’s case, this influence is based on the following external factors: 1. Google is one of the largest suppliers in the smartphone industry. Companies invest aggressively in marketing and customer retention. Apple has its own operating system and so in its case, the bargaining power of suppliers is even limited. Low differentiation of products (strong force) 3. One of the primary reasons behind the growing bargaining strength of the customers is the high number of substitutes in the industry. In addition to that it should answer the question, which strategy is executed by Apple, Sony and Xiaomi in this highly competitive industry and show what advantages or disadvantages these strategies have. Indeed, it can be said that this element exerts the lowest force, as there are very few domestic or international competitors for China Mobile. Apple faces the strong force of competitive rivalry or competition. In 1998, the Industry was in a state of Duopoly, with the only players being Eircell, with 330,000 customers, and Esat Digifone, with 80,000. Recently, the ban on Huawei related to the use of Android OS caused its sales to fall. Competition has grown stronger because of the low scope for differentiation and demand having grown stagnant in recent years.CITE THIS:APA: Pratap, A. What Are The Risks Of Cancer? Porter’s Five Forces is also used to evaluate the rivalry and power of the individual players within the smartphone industry. Following is a five forces analysis of the smartphone industry. (Porter’s Five Forces Model). in English literature from BRABU and an MBA from the Asia-Pacific Institute of Management, New Delhi. There are several forces that affect the competitive position and success of smartphone companies. The top five brands with the largest market share include Samsung, Huawei, Apple, Xiaomi, and Oppo. A strategist can analyse, any market by rating each competitive force as high, medium, low in strength and rate as follows. January 23, 2020 November 25, 2019 by Abhijeet Pratap. Analysis Of Porter's Five Forces Attractiveness Of Telecommunications Industry. The Five Forces Analysis on Gaming Industry. Porter’s Five Forces Model – Example: Mobile Phone Industry Michael Porter developed the Five Forces method of analysis in 1979. Finally, the large industry size with a sizzling growth r… Required fields are marked *. The threat of substitutes could be described as low, due to the added functionality that smart phones and mobile phones have over single featured technology products such as digital cameras. “Porter’s Five Forces Analysis of Smartphone Industry.” Notesmatic, 25 Nov. 2019, notesmatic.com/2019/11/porters-five-forces-analysis-of-smartphone-industry/. Products with higher quality are higher in demand. The smartphone industry is marked by heavy competition. What is Five Forces Analysis? There is a total number of 9,269 businesses worldwide which shows the intensity of the competition in the industry. … Moreover, most suppliers lack forward integration capability which also leads to lower control. To overcome the threat from substitutes brands invest in marketing and product innovation. All these factors together limit the threat that arises from the entry of new players in the market. For example, smartphones with higher processing power and efficient cameras are higher in demand compared to other models. Demand has plateaued in recent years, leading to an increased focus on innovation and customer retention. Higher the competition level, advanced the technologies will be, and prices will be competitive, which greatly impa… However, large players with a strong image and sufficient investment can still enter. Xiaomi Porter’s Five Forces consists of five individual forces that shape an overall extent of competition in the industry. Developed by Michael Porter in 1979/1980 Considered a classic industry analysis tool Provides a framework for perspective on multiple competitive factors affecting your company and industry Five basic competitive forces whose collective strength determines the long-run profit potential of an industry There are several forces that affect the competitive position and success of smartphone companies. These five forces are a part of every industry. Analyse the smartphone industry and how the five forces have affected Xiaomi, as well as global rivals and the impact on industry structure, attractiveness, and profitability. To maintain their competitive position in the industry, smartphone companies are focusing heavily on research and development as well as marketing. The report investigates the computing capabilities of smartphones, and their ability to support several multimedia applications. While Apple makes only premium models, its products compete with the premium offerings from Samsung and Huawei as well as Xiaomi. The threat of new entrants is seen as low, because the technology investment needed to compete in this fast moving industry is high. By using the information in Huawei five forces analysis, strategic planners will be able to understand how different factors under each of the five forces affect the profitability of the industry. The bargaining power of suppliers in the smartphone industry is generally low except for the few large players like Google. The bargaining power of suppliers is medium because mobile phone manufacturers rely on their key suppliers for quality component parts at competitive prices and the operating system such as android is open source. The threat of new entrants in the smartphone industry is moderate. Apart from the top five, there are other brands also competing for market share. The switching cost to the consumers are very low, which means, consumers can easily switch to other brands after gaining more information for that product. Driving Forces Dominant Features Five Forces Strategy Group Map Key Success Factors Company Analysis Overview Value Chain Analysis SWOT Analysis Competencies Business Analysis Competitive Strategy Recommendations 3. Porter’s five forces model is an analytical tool to analyze the competitive position of businesses and the profitability of a particular industry. While the number of smartphone models has grown in the market, they are now more affordable than some years earlier. Other factors that moderate the threat from new players include the brand image of existing players, their focus upon research and innovation and high standards of product quality. Such aggressiveness, observable in rapid innovati… The report discusses that fact the smartphone industry has rapidly grown over the last two decades. Some of the factors that control the bargaining power of the customers include product quality, brand image, and prices. Porter’s Five Forces Tip #3: Understand the threat of products that customers might be able to use instead of yours 4. Porter’s Five Forces is an analytical framework developed by Michael Porter (1979). Supplier Power. contact: support@notesmatic.com, admin@notesmatic.com, Factors Driving Smartphone Sales Globally, How To Market Your Small Business Successfully, What You Need To Know About Marketing for Your New Business. A stronger force means lower profitability, and a weaker force means greater profitability. The bargaining power of buyers in the smartphone industry has increased owing to several factors. Another important factor that deters new players is the level of demand which has plateaued in recent years. High aggressiveness of firms (strong force) 2. In conclusion, competitive rivalry is very high for mobile phones, with major brand competitors such as Samsung, Apple, Nokia and Sony competing and dominating the industry. Smartphones have ushered in a new generation of modern communication. The threat of substitutes emerging from competing products also grows higher because differentiation has become difficult. They also play a critical role in the smartphone industry and affect the profitability of individual brands. The overall threat arising from substitute products is moderately high in the smartphone industry. He graduated with a Hons. The leading companies are also among leading spenders on research and development. .embed-container { position: relative; padding-bottom: 56.25%; height: auto; overflow: hidden; max-width: 100%; } .embed-container iframe, .embed-container object, .embed-container embed { position: absolute; top: 0; left: 0; width: 100%; height: 100%; }, Your email address will not be published. The analysis of the industry should give an understanding of the driving factors and the attractiveness of the smartphone market. Porter’s Five Forces on the Smartphone Industry Published by yanggu at 12:47 am under Uncategorized RIM’s stock dipped below $20 per share today , but that’s just one company. The five forces developed by Porter include threat of entry, power of suppliers, threat of … Porters Five Forces Model. (2019, November 25). Figure 1 Samsung Porter’s Five Forces . The legal framework in most countries also acts as a barrier to entry. Analyse the global smartphone industry and how the five forces have affected Huawei and rival firms and the impact on industry structure, attractiveness, and profitability. Low switching cost (strong force) Companies like Samsung and LG aggressively compete with Apple. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers. The reports investig… The main purpose of Porters Five Forces is to find a position in an industry where a company can defend itself against competitive forces or it can influence them in its favour. The report considers whether the market segment is controlled by a few major players . Porter’s five forces: Porter’s five forces analysis is done to understand the industry attractiveness of the smart phone industry. The leading brands in this industry with the highest market shares are Samsung, Apple, and Huawei. These elements not only show the state of company but also why some of them are so … As China Mobile operates in a heavily regulated market where the government limits competition, the power of this element is not high. Harvard Business Review. Five forces analysis looks at five key areas namely the 1) threat of entry, 2) the power of buyers, 3) the power of suppliers, 4) the threat of substitutes, and 5) competitive rivalry Threat of New Entrants: The markets in which Apple competes in are highly competitive and threat of new entrants is also high. [mobilixshortcode] Porter’s Five Forces Model – Example: Mobile Phone Industry In 1979, Harvard Business Review published How Competitive Forces Shape Strategy by a young economist and associate professor, Michael E. Porter. Porter’s Five Forces Analysis of Smartphone Industry. External environment – Smartphone industry Smartphones are not only revolutionizing the mobile phone industry. Leading smartphone brands like Apple, Samsung and Huawei are comparatively larger firms with enormous financial strength compared to the suppliers. However, the incumbent players aggressively invest in marketing and innovation to retain their market share and so winning a significant market share is very difficult for any new player. The number of models with large screen smartphones is very high. Moreover, while Samsung and Huawei have managed competitive pricing strategies, Apple which is known for its premium prices also priced the base model of the iPhone 11 competitively in order to maintain demand. Industry analysis is crucial for sound business management. The result was heavy sales. The chosen market for this market analysis example is the smartphone industry. We will further discuss the purpose of this market analysis in the next section. Google entered the market with its Pixel smartphone. Porters Five Forces Model. These five forces are a part of every industry. It is why suppliers have to follow the quality standards set by the smartphone makers and their bargaining power remains limited. The threat of substitutes in the smartphone industry mainly comes from rival brands and their products. Otherwise, most of the suppliers are smaller players and most of them are located in the Asian region. Except, Apple’s iPhone rest of the smartphones run on the Android OS. LG and Vivo have also maintained impressive market shares. This component of Porter’s Five Forces analysis model determines the intensity of the influence that competitors have on each other. Porter’s Five Forces Analysis of Smartphone Industry. The number of substitutes is already high in the market since there are several models in each segment. Summary Of Recent Research Into Mobile Phones. Your email address will not be published. However, some factors that can moderate the threat from substitute products include product quality and brand image. These include the bargaining power of suppliers and buyers, barriers to entry, threat of substitutes, and the competitive rivalry of firms already in the industry. The company has a brand value of 91.3 billion USD with total global revenue of the company has reached to 218.7 billion USD (IBIS World, 2019). In 1979, Harvard Business Review published How Competitive Forces Shape Strategy by a young economist and associate professor, Michael E. Porter. The size of the consumer electronics manufacturing industry is massive as it collects revenue of more than 1 trillion USD annually which speaks volumes of its success and depth. Chinese Smartphone Industry Five Force Analysis. MGMT-1100 September 13, 2012 The Five Forces Analysis on Gaming Industry Every man in the business uses five forces in order to progress in company’s industry.The five forces are customers, entrants, substitutes, supplies, and the nature of rivalries. Michael Porter designed a Five Force analysis for use in exploring the environment in which a company or a product is operating so as to create competitive advantage (Rothaermel, 2015). How To Download Movies On Windows Mobile Phones – App, The Role Played By Media Companies in Oklahoma City, Why No Small Business Should Ignore SEO Services Even in 2020.