1. Porter’s 5 forces Model
And Porter’s Value Chain for
Apple

2. 1. Porter’s 5 forces Model

3. Purpose of Porter’s 5 Forces Model
• Analyzing how the ability of a firm to generate or
maintain a competitive advantage

4. Apple Porter’s 5 forces Model
2
Rivalry
•The Company
•Competing companies
1
Threats of new Entrants
5
Buyer Power
3
Threats of Subtitutes Products or
Services
4
Supplier Power

5. • Apple dominates consumer electronics industry
• Put relentless efforts on R&D
• Each of the company’s products is unique
• Threat of new entrants is very low due to apple is continously differentiate its
products from its rivals.
• Apple has wide spread production that it can produce at a lower cost due to
Threats of new Entrants

6. • Not a threat to apple due to introduction of iphone and ipad.
• The rivals put the relentless effort such as R&D to introduce new product to ensure
that they will be always the first and difference, but again apple has no issue with
differences. They always be number 1 to introduce products like iphone(touch
screen concept), ipad(the tablet) etc.
Rivals

7. • Examples of Subtitutes :
• Ipod  samsung mp3 player / Sony MP3 player
• Ipad  samsung tab
• Iphonesamsung galaxy note / sony ericcson / nokia
• Apple achieves economies of scales, enabling it to produce in lower cost
• Apple market better than the competitor
• Apple brand is well known and recognised brand
Threats of Substitutes Products or Services

8. • The supplier has some power due to they have the ability to supply the unique
material to apple in the way for apple to produce the unique products
Supplier Power

9. • Not a threat to apple.
• Apple has millions of buyers (individual and large corporations)
• They have the ability to increase its prices of some products due to unique and well
differentiated.
• Apple need to ensure that the price increase is not too drastic
Buyer Power
References: http://lloyd7160.blogspot.com/2013/02/apple-and-five-forces-model.html

10. 2. Porter’s Value Chain

11. - Components generally obtained from multiple sources.
- Hardware products are manufactured by outsourcing partner primary in Asia e.g.
Foxconn.
- Delegate raw materials acquisition : Works with its OEM partners to delegate the
raw materials acquisition process but provides some supervision for quality control
purpose
- Automated receiving systems : Implemented sophisticated automated receiving
systems to speed up the receiving process and reduce facility foot printand storage
space requirement
Inbound Logistic

12. - Elimination of toxic substances in Apple products. Every product is free of BFRsand
other harmful toxins, Apple have also qualified thousands of components to be free
of elemental bromine and chlorine.
- Products are designed highly recyclable aluminum enclosure.
- Utilize original equipment manufacturers (OEM) ’s economies of scale
- Apple outsources production to third party OEM partners to utilize their economies
of scale while removing the burden of production management from the firm.
Operations

13. - Apple used variety of direct and indirect distribution channel, such as retail
stores, online stores, 3rd party cellular network carriers, whole salers, retailers and
value added resellers.
- Continue to expand and improve its distribution capacities by expanding the number
of its own retail stores worldwide in order to ensure a high quality buying experience
for its product
- Economical packing : Employed teams of design and engineering experts who
develop product packaging that’s slim and light yet protective. Efficient
packaging design not only reduces materials and waste, it also helps reduce the
emissions produced during transportation.
Outbound Logistic

14. • Reasonable Pricing : Introduce their product with reasonable price
• Brand Loyalty : Always make it as a different products compared to others
• Retail Outlets : Allow the customer easy to obtain the products.
Sales and Marketing

15. - Customer service: Phone customer service
- Information of product :
www.apple.com
- Support of product :
http://www.apple.com/my/support/
Servicing