Threat of substitutes in smartphone industry. Yang Gu's Blog » Porter’s Five Forces on the Smartphone Industry 2019-02-11

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Porter's five forces analysis

threat of substitutes in smartphone industry

For example Samsung galaxy S4, Nokia Lumia 720. Michael Porter developed the Five Forces method of analysis in 1979. In order to evaluate the micro-environment that Nokia operates in, its Porter Five Forces Model is done which takes into consideration customers, suppliers, substitutes, rivals and new entrants. For more generic, undifferentiated products the threat is always higher that from more unique. Price wars and intensive advertising are common in this industry as big companies will have the resources and financial means. Moreover, it has maintained its own ecosystem of products that is not linked to products or services from other brands. There are a large number of suppliers that are willing to supply the parts required by Nokia for the manufacturing of their products.

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Porters Five Forces

threat of substitutes in smartphone industry

According to the data provided by there are approximately 18,000 android devices available on the market. In the absence of other factors such as brand loyalty or differentiation, the choice to move will not be a difficult one. A low threat from substitutes means that there will be less competition among the existing firms and there will be more potential to earn higher profits. Moreover, Microsoft does not have any experience in the Smartphone industry and this may prove to be a potential challenge if they wish to continue competing with Apple and Samsung. The Right Game: Use Game Theory to Shape Strategy. Therefore, a substitute would be to buy all of these gadgets individually and keep them in your pocket at all times.

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Yang Gu's Blog » Porter’s Five Forces on the Smartphone Industry

threat of substitutes in smartphone industry

It was found in Finland over 140 years ago and is currently operating in 120 countries worldwide. Bargaining power of buyers: While the bargaining power of the individual buyers is insignificant, as a group they hold somewhat significant clout. Coca Cola remains the most valuable brand in the world according to a study conducted in 2011. Work Towards Building Customer Loyalty Through sustained good relationships, good service and continued value for money, customer loyalty can be created and built up over time. This represents potential to all competitors within the industry. Approaching market saturation for many product categories in consumer electronics industry intensifies the rivalry among existing firms and there is a little differentiation among the range of products offered. Slow industry growth In a slow growth market, companies can only grow by capturing market share from each other, which leads to increased competition.

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Yahoo is now part of Oath

threat of substitutes in smartphone industry

Provides the capacitive touch screen Glu Mobile, Inc. Moreover, Samsung maintains an extensive communication with its suppliers within the scope of various programs and initiatives such as Shared Growth Day, Supplier Dialogue Fair, Hot Line and informal meetings with suppliers. It draws from to derive five forces that determine the competitive intensity and, therefore, the attractiveness or lack of it of an industry in terms of its profitability. The Smartphone industry is a well established market and the threats of a new entrant is low, as technology needed to rival the devices already available is quite advance if they want to differentiate from them 2. In more generic products, there are often more than one ways to address a particular need. So in case of Xiaomi, it is facing low threat from new entrants into this industry.

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Porter’s Five Forces Model (Porter Analysis) of Xiaomi

threat of substitutes in smartphone industry

I could choose large a hypermarket store such as Target. This involves improving product value and lower customer cost. These people may continue to stay faithful to Nokia and are hence less resistant to change. As part of your analysis using Porters Five Forces model, you need to look outside of your own industry and think about those substitutes that pose a threat to your market. I could also choose traditionally retail stores such as Safeway or Whole Foods. Is WikiWealth missing any analysis? Then an industry with excess capacity will have greater rivalry among competitors. Nokia is one of the largest manufacturers of cell phones in the world.

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Five forces model cellphone industry

threat of substitutes in smartphone industry

Other direct competition comes from local cola drinks, as well as other soft drinks. Here is a five Forces analysis of the famous technology brand Apple. Apart from bottlers, concentrate is also sold to restaurants and fast food chains to be used in soda fountains. More tech players might diversify into this area in future. In conclusion, the threat of a substitute product is moderate due to the fact a smart phone is no longer just for making calls but for all the other function as well are expected on all smart phones.

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Porters Five Forces

threat of substitutes in smartphone industry

Threat of Substitutes — Determining Factors Several factors determine whether or not there is a threat of substitute products in an industry. The secondary challenge is establishing brand name recognition within an industry that already has several companies, such as Apple, Google, and Amazon, with very strong. Nokia is currently the only phone brand operating under the Window Software. There are low switching costs associated with a move from the product to another. There were no costs as every transaction was atomic, with no incentive for customers not to try another product.

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Five forces model cellphone industry

threat of substitutes in smartphone industry

They consist of those forces close to a that affect its ability to serve its customers and make a. Retrieved on November 11, 2013, from. So, the bargaining power of buyers can be considered as weak to moderate. Nokia is one of the leading firms in the mobile phone industry so hence their suppliers would attempt make their prices competitive as they would not want to lose such an illustrious organisation. Every brand is pushing very hard in terms of quality and prices to attract the customer.


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Five Forces Analysis of PC Industry

threat of substitutes in smartphone industry

Therefore, no hardware supplier would be in a position to bargain with Nokia and be lucky to have such a huge purchaser. How easy is it for customers to switch to these substitutes? The average Fortune Global 1,000 company competes in 52 industries. So, while the threat of new entrants in Laptops and smartphone market is low, existing tech giants can diversify into these areas. Moreover, the report contains analyses of Samsung leadership, business strategy, organizational structure and organizational culture. Porter five forces — competitive analysis.

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Porters 5 forces for mobile industry

threat of substitutes in smartphone industry

As Blackberry do not have a direct store to sell to their consumers, intermediate stores also have other handsets readily available for the consumers, which makes it difficult for Blackberry to have a direct impact on the selling of their handsets. Apart from that Apple products are not developed entirely by any single supplier. These products are threats to the owners of the product that is being sub standardized, because they have a lesser cost, poor quality and they usually do not follow standards within the industry. Interests: Global markets, business, investment strategy, personal success. Global recessions have also meant cost cutting exercises for most airlines in the industry and often less travel in the part of consumers. The second reason is that any new entrant will be required to spend a huge capital on research and development, technology, and then marketing in order to become at par and compete with the established players.

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