Porter’s five forces model is an analytical tool to analyze the competitive position of businesses and the profitability of a particular industry. 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. These elements not only show the state of company but also why some of them are so … Porter’s Five Forces Model – Example: Mobile Phone Industry The number of substitutes is already high in the market since there are several models in each segment. These five forces are a part of every industry. There are several forces that affect the competitive position and success of smartphone companies. The chosen market for this market analysis example is the smartphone industry. Porter’s Five Forces is also used to evaluate the rivalry and power of the individual players within the smartphone industry. Low switching cost (strong force) Companies like Samsung and LG aggressively compete with Apple. Porters Five Forces Model. This five forces analysis is just one part of the complete Porter strategic models. Stagnating demand also works as a barrier to entry for new brands since they will have trouble winning customers for new products. 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. Understand how Huawei has managed to defend against intense competition and the strategies it uses to create 'blue oceans' that are defensible, helping it capture market share and maintain competitive advantage. Your email address will not be published. Porter’s Five Forces is an analytical framework developed by Michael Porter (1979). 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. Customers have major brand choices and don’t mind paying higher prices, for the latest smart phones and mobile phones. The leading brands in this industry with the highest market shares are Samsung, Apple, and Huawei. 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. 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. Industry analysis is crucial for sound business management. There are several forces that affect the competitive position and success of smartphone companies. He graduated with a Hons. Mobile Phone Radiation – Microwave Health Risks – Facts About Heavy Mobile Phone Use In Adults And Children. It is why suppliers have to follow the quality standards set by the smartphone makers and their bargaining power remains limited. Following is a five forces analysis of the smartphone industry. January 23, 2020 November 25, 2019 by Abhijeet Pratap. New entrants could find it very hard to compete and gain economies of scale and market share against major brand players in this industry. 3 Porter’s Five Forces. The focus on customers and customer experience is much higher than ever before. In order to make a complete analysis of the environment of how the smartphone industry operates we need to evaluate those forces that work in it as well as seeing how the forces share its competitive environment. He likes to blog and share his knowledge and research in business management, marketing, literature and other areas with his readers. 1  The Five Forces model aims to examine five key forces of competition within a … 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. The overall threat arising from substitute products is moderately high in the smartphone industry. [mobilixshortcode] Another very popular analysis tool is Michael Porter’s five forces model An analysis of five key forces which profiles the attractiveness of an industry. The bargaining power of suppliers in the smartphone industry is generally low except for the few large players like Google. Most smartphones run on the Android operating system. Google entered the market with its Pixel smartphone. ... Maruti the Porter’s Five Forces Analysis Is Designed to Evaluate the Competitive Forces in the Industry the Firm Operates. External environment – Smartphone industry Smartphones are not only revolutionizing the mobile phone industry. Indeed, it can be said that this element exerts the lowest force, as there are very few domestic or international competitors for China Mobile. Threat of substitute products or services for each product category offered by Samsung is substantial.Samsung smartphones can be substituted with ordinary mobile phones at any time with no additional costs for customers. Smartphones have ushered in a new generation of modern communication. “Porter’s Five Forces Analysis of Smartphone Industry.” Notesmatic, 25 Nov. 2019, notesmatic.com/2019/11/porters-five-forces-analysis-of-smartphone-industry/. Figure 1 Samsung Porter’s Five Forces . Apart from the top five, there are other brands also competing for market share. The threat of substitutes emerging from competing products also grows higher because differentiation has become difficult. These forces are illustrated in Figure 1 below: Figure 1 Xiaomi Porter’s Five Forces Google is one of the largest suppliers in the smartphone industry. Supplier Power. The Smartphone industry is analyzed in the Five Forces Analysis completed in this paper, and is shown in Figure 1. The report investigates the computing capabilities of smartphones, and their ability to support several multimedia applications. The reports investig… The buyer power is one of the two horizontal forces that influence the appropriation of the value created by an industry. Companies invest aggressively in marketing and customer retention. To overcome the threat from substitutes brands invest in marketing and product innovation. Except, Apple’s iPhone rest of the smartphones run on the Android OS. Further, the fact that China Mobile is a monopoly player coupled with the large market share it has means that it faces little or no competition from existing or as we shall discuss, new players. A stronger force means lower profitability, and a weaker force means greater profitability. Companies are investing aggressively in R&D to maintain their market shares. There is a total number of 9,269 businesses worldwide which shows the intensity of the competition in the industry. Without knowing the market forces at play, ... that isn’t a smartphone itself. 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. Moreover, customers are well informed and have several choices before them. Porters Five Forces Model. In Apple’s case, this influence is based on the following external factors: 1. The Five Forces Analysis on Gaming Industry. Abhijeet has been blogging on educational topics and business research since 2016. Capital requirement: - Constant innovation on technology - Large capital investment Threat: MID to LOW Threat: MODERATE - Force threat: moderate to low - Market: attractive because low competition Porter's 5-forces model analysis Learning curve effect Competitive structure: 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 smartphone industry is marked by heavy competition. However, some factors that can moderate the threat from substitute products include product quality and brand image. Porter’s Five Forces Analysis of Smartphone Industry. Leading smartphone brands like Apple, Samsung and Huawei are comparatively larger firms with enormous financial strength compared to the suppliers. 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