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Market Selection & Five Forces Strategy Tool
The Intensity of Rivalry
The smartphone manufacturing industry has a high intensity of rivalry based on the rivalry strategy tool. This is because there are many companies that manufacture smartphones and they are all competing to increase their market share of the smartphone industry (Gehani, 2016). The smartphone industry is growing with each passing day making the industry competitive and manufacturers have to ensure that they remain on top or in front of their competitors. There is increasing competition especially from Chinese manufacturers who are developing cheap and high-end smartphones that are attractive and targeted to the low-income earners. This puts a strain on the well-established manufacturers like Apple and Samsung who are left to battle for the top end spectrum of the market. Therefore, for a company to continue leading the smartphone manufacturing industry it should adjust its strategy. Ignoring the emerging market of smartphones would result in a manufacturer losing their market share and allowing rivals to take over. There is a threat of competitor rivalry and any manufacturer should recognize this threat. Porters five forces model reveal whether an industry is truly attractive and they would help investors to anticipate positive and negative shifts in the industry. Smartphone manufacturers have to keep up with the industry growth rates and ensure they remain relevant in the industry. This will ensure that the manufacturer is able to compete and increase their...
It is not easy for the smartphone manufacturers to switch suppliers and this means the suppliers have increased power. A majority of the smartphone manufacturers source their supplies from China and this is mainly due to the low manufacturing rates offered in the country. In turn, manufacturers are forced to seek out these suppliers because they cannot be able to manufacture their devices elsewhere at this competitive rate (Oh & Oh, 2017). With the advancements in operating systems like Android and iOS, the chip makers have managed to increase their power over the manufacturers. This is mainly because the manufacturers are more dependent on the chip makers to develop chips that will work seamlessly and effectively with the new OS. There are also a limited number of suppliers for smartphone chips making the manufacturers dependent on the few who are available. This limits the options in the industry and reduces the power of the manufacturers in changing suppliers. The suppliers for the high-end smartphones are quite specialized meaning they have more bargaining power over the manufacturers.
The Importance of Correctly Identifying and Choosing A Firm’s Industries and Markets
In order for a firm to compete and succeed it needs to choose the correct industry and markets that is should participate in.…
References
Gehani, R. R. (2016). Sensemaking corporate brand values in the smart-phone industry. SAM Advanced Management Journal, 81(4), 37.
Oh, Y., & Oh, J. (2017). A critical incident approach to consumer response in the smartphone market: product, service and contents. Information Systems and e-Business Management, 15(3), 577-597.
Vuori, T. O., & Huy, Q. N. (2016). Distributed attention and shared emotions in the innovation process: How Nokia lost the smartphone battle. Administrative Science Quarterly, 61(1), 9-51.
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