Porter's Five Analysis on the Apple Inc.

Apple Inc. is a technology company widely known for the designing, production and selling merchandise to do with mobile phones, music and computers. Apple has become some sort of a cult-brand over the past few years with its lifeline being retained and marinated by iTunes, Imac line, and QuickTime. Apple has increasingly concentrated on increasing the market share of their iPhone which has a range of smartphones of varying specifications. In the long term pursuit, Apple wants to be the highest seller of their merchandise at the global platform, and it is this long-term goal that informs this analysis to see the challenges and opportunities that Apple faces in this pursuit.
The porter’s five forces model of analysis of markets often takes into account five major areas, just as the name suggests. These five forces are as follows, with the ratings alongside in the concept of Apple smartphones; Competitive rivalry or competition (strong force), Bargaining power of buyers or customers (strong force), Bargaining power of suppliers (weak force), Threat of substitutes or substitution (weak force), Threat of new entrants or new entry (moderate force).
Competitive rivalry or competition
Most IT companies face high competition within the technology oriented market especially in the contemporary highly dynamic world of technology. Due to its successful trend, iPhone has attracted immense competition from other brands like Samsung, LG, Blackberry and Lenovo in the smartphone market. There are two major external factors that iPhone has to contend with, the high aggressiveness of firms and the low switching cost. The aforementioned competing brands engage in aggressive advertising, rapid innovation as well as imitation to always catch up with iPhone as a brand. The switching cost is also quite low which technically means it can be very easy for customers to switch from iPhone to the other brands. Apple products and the iPhone in particular hence faces high product substitution possibility, the technology of the year after or even a few months ahead may be totally different hence Apple must have the correct approach to the prevalent business environment (Wendel Clark, 1999).
Bargaining power of buyers or customers
The customer bargaining power can easily affect Apple’s business and this power is based on these two external factors; low stitching cost which is a strong force, and small size of individual buyers which is a weak force. Customers can easily change brands which makes them a powerful force in forcing Apple to work hard towards customer satisfaction. In line with the customer purchases, a single purchase is way small in comparison to the total revenue of Apple, however, due to the strong possibility of customers switching, the company still feels the force from customers. Customer bargaining power still remains one of the most significant variable in formulation of strategies otherwise the threat of having new entrants taking over the market share of the company remains to be a real threat (Team FME, 2013).
Bargaining power of suppliers
In the case of Apple and its iPhone brand which is of interest here, Apple faces a weak force of the supplier bargaining power, meaning suppliers cannot easily impose their demands on Apple. On this aspect, Apple enjoys two external factors that render the suppliers weak in the bargaining power; there is a high number suppliers making this a weak force and high overall supply which also makes this a weak force from suppliers of Apple. It is worth noting that Apple has less than 200 suppliers that it sources its products from, but there are numerous more options with the many more suppliers globally. This means that the suppliers cannot impose their demands on Apple, consequently Apple and iPhone brand in that effect does not have to prioritize the bargaining power of the suppliers while setting out their strategic innovation goals (Johnson F.L., 2018).
Threat of substitute of substitution
This refers to the existence and availability of other products outside the realm of the common product boundaries. Here, the Porter’s forces determine how strong the substitute products are in attracting customers. In the case of Apple, substitutes are seen to have a weak standing taking into account the following two external factors; high availability of substitutes which makes this force a moderate force and low performance of the substitutes which in this case is a weak force. It is worth noting that the substitutes for iPhone are readily found in the market hence people can easily opt for digital cameras instead of the iPhone camera to take pictures, people can use landline phones to make calls and this makes them a moderate force. However, it is also true that the performance of these substitutes cannot match iPhone since they are limited in features. This makes it a weak force since most clients would rather stick to the iPhone due to its advanced features making substitution to have a weak force in impacting Apple business (Husso M., 2011:Pp 35). This hence indicates that Apple does not need to worry much about substitution in the process of their marketing as well as product design and development.
Threat of new entrants or new entry
This aspect of Porter’s Five Forces is meant to indicate the effect as well as the possibility of having a new competitor getting into the market. In the case of Apple, the pressure form new entrants can be categorized as moderate based on these three external forces; high capital requirements which is a weak force against Apple, high cost of brand development which is a weak force against Apple and capacity of potential new entrants which is a strong force in this case.
In order for a business to establish products that would compete with giants like Apple requires massive capital. Developing a new brand to the level that it will be a challenge to Apple brands would also require time and a lot of capital, making new entrants highly unlikely to get into the venture, and even if they did they would not be a significant force to challenge the dominance of Apple. However, it is a practical and conceivable idea that firms with large capitals hence the capacity to enter the market and impact Apple exists. Google is such a practical example with their Nexus smartphones just as Samsung did the same too hence the threat of new entrants is considered moderate. In this aspect of Porter’s Five Forces, it means therefore that in order for Apple to maintain the competitive advantage it has, it needs to continually invest in innovation and rigorous marketing of its products.
References
Husso M., (2011). Analysis of Competition in the Mobile Phone Markets of the United States and Europe. Retrieved April 22, 2018 from https://pdfs.semanticscholar.org/fbb4/3361b439ed88cbbe595259698d7543c63587.pdf
Johnson F.L., (2018). The 5 Competitive Forces Framework in a Technology
mediated environment. Do these Forces still hold in the Industry of the 21st Century? Retrieved April 22, 2018 from http://essay.utwente.nl/66196/1/Johnson_BA_MB.pdf

Team FME, (2013). Porter’s Five Forces: Strategy Skills. Retrieved April 22, 2018 from http://www.free-management-ebooks.com/dldebk-pdf/fme-five-forces-framework.pdf
Wendel Clark. (1999),”SWOT Analysis for the Apple Company’’ Demand Media Inc (eHow). Retrieved April 22, 2018 from http://www.ehow.com/facts_6801257_swot-analysis-apple-company.html.