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Porters Five Forces Model Example Mobile Phone Industry
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In 1979, Harvard Business Review published How Competitive Forces Shape Strategy by a young economist and associate professor, Michael E. Porter. • 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. • A strategist can analyse, any market by rating each competitive force as high, medium, low in strength and rate as follows. • If we look at the mobile phone industry worldwide, the five forces could be rated as follows. • The threat of new entrants is seen as low, because the technology investment needed to compete in this fast moving industry is high. • • • 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. • The bargaining power of buyers could be rated as medium, with a wide variety of mobile phones available. Customers have major brand choices and don't mind paying higher prices, for the latest smart phones and mobile phones. • 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. • 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. New entrants could find it very hard to compete and gain economies of scale and market share against major brand players in this industry. • Reference: Porter, M.E. (March/April 1979). How Competitive Forces Shape Strategy . Harvard Business Review. • Created at http://www.b2bwhiteboard.com
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