porters five force model with respect to Apple INC. BY ; MUNNAVAR SHAIKH COLLEGE; SS AGRAWAL COLLEGE,NAVSARI,GUJARAT.

1. ANALYSING MICHAEL PORTERS 5
FORCES MODEL WITH RESPECT TO
(Apple Inc.)
• SUBMITTED TO : SHITAL PADHIYAR
BY
1. ANMOL
2. TANVI
3. MUNNAVAR . SHAIKH
CLASS : TYBBA.

2. MICHAEL PORTER

3. Apple Inc

4. INTRODUCTION OF Apple INC.
• Apple INC. is an American multinational
technology company founded by Steve
Jobs, Steve wozniak and Ronald Wayne
on APRIL 1, 1976 to develop and sell
personal computers.After that it was
renamed as Apple Inc. on january 9,
2007, to reflect its shifted focus towards
consumer electronics.Its Headquarter is
located at CUPERTINO, CALIFORNIA.

5. Apple Inc.
 Industry Computer hardware,computer software
 Digital distribution, Consumer electronics.
 Products Mac, iPod, iPhone, iPad, Apple Watch
 Apple TV,OSX, iOS,iLife,iWork.
 Services Apple pay, Apple store, online app store,
 i Tunes Store ,iOS App Store,Mac App Store,
 I Books Store, I Cloud , Apple Music.
Its OPERATING INCOME is US$71.230 Billion
with NET INCOME US$53.394 Billion and
REVENUE US$233.715 BILLION (2015)

6. THE PORTERS 5 FORCES MODEL
• MICHAEL PORTER developed the Five Forces method
of analysis in 1979.The FIVE FORCES MODEL aims to
examine Five key forces of competition within a given
industry. The main force examined by PORTERS
model is the level of competition within an industry
and business strategy development.

7. PORTERS 5 FORCES MODEL

9. THREAT OF NEW ENTRANT OR NEW
ENTRY.(MODERATE FORCE)
• Apple experience the moderate force of the threat
of new entrant. This components of porters 5 forces
model indicates the effect and possibility of new
competitors entering the market. In Apple case ,new
entrant exert a moderate force based on the
following external factors.
1. HIGH CAPITAL REQUIREMENT
2. HIGH COST OF BRAND DEVELOPMENT
3. CAPACITY OF POTENTIAL NEW ENTRANTS

10. THREAT OF NEW ENTRANT OR NEW
ENTRY.(MODERATE FORCE)
• Establishing a business to compete against firms like apple requires
high capitalisation.Also it is condiderably costly to develop a strong
brand to compete against large firms like Apple.These factors make
new entrant weak.
• However there are large firms with the financial capacity to enter the
market and impact Apple.
• .Google has already done so through products like NEXUS SMARTPHONES.
• Samsung also used to be a new entrant.
• These examples shows that there are companies that have potential to
directly compete against Apple.
• Thus, the threat of new entry is moderate and this part of 5 forces
analysis shows that Apple must maintain its competitive advantages
through innovation and marketing to remain strong against new entrants.

11. COMPETITIVE RIVALRY OR
COMPETITION WITH Apple (Moderate force)
FORCE)
• Apple Faces the strong force of competitive rivalry or competition . This
component of Porters 5 forces analysis model determines the intensity of
influence competitor have on each other .In Apple case this influence is
based on the following external factors.
1. High aggressive of firms
2. Low switching cost
Companies like blackberry ,samsung, LG and others aggressively compete
with Apple. Such aggressiveness is observable in rapid
innovation,aggressive ,advertising and innovation.On the other hand
switching cost is low, which means that it is easy for customers to switch
from Apple to other brands , thereby making competition even tougher .
Thus this part of the five forces analysis shows that competitive rivalry is
among the most significant consideration in Apple strategic formulation.

12. COMPETITIVE RIVALRY
• Apple has avoided price based competition thus far by
staying away from low end market where price is the
main differentiator.
• BY generating a superior product to the Android pones
, rival tablets and e readers it compete based primarily
on quality,service and unique ecosystem.
• It is possible that its competitor have similar ways of
doing the same thing the reality is that once a person
buys Apple products there is unique appeal to stay
within that ecosystem .With this in mind Apple has an
incentive to try to get users hooked on Apple products
early on and that starts with staying relevant.

13. BARGAINING POWER OF APPLES
BUYERS.(WEAK FORCE)
This force looks at the power of the consumer to
affect pricing and quality. Consumer have power
when there are number of sellers as well as when it
is easy to switch from one business products or
service to another. Buying power is low when
consumers purchase products in small amounts and
the sellers product is very different from any of its
competitors.

14. BARGAINING POWER OF APPLES
BUYERS.(WEAK FORCE)
• SWITCHING COST
The cost for buyers to switch between Apple and another provider
can be significant ,but the issue is not strictly about price. The real
consideration an customer have to make is about the high
updated software application that Apple INC provides.Remember
that apple software and media only works with Apple devices. If
an Apple user switches to a device made by a different company
the media purchased for the Apple devices does not work , nor do
any smartphone application or software designed for Apple. In
this sense bargaining power is low. It would cost so much for users
to change operating system of iOS.
EXAMPLE : A VIDEO EDITOR iMOVIE is only compatible with
Apple device. Moreover iMOVIE is number 1 application which is
not compatible with any other smartphone of other android
devices.

15. FRAGMENTED CUSTOMER
• The Bargaining power of Apples customer is also low because the
market is fragmented . The companys products and services appeal
to a wide variety of individual and the products and services have a
broad range of uses and users.
• For Apple , individual bargaining power is a weak force since the
loss of any one customer represents a negligible amount of revenue
for Apple . How ever the collective market place bargaining power
of customer , the possibility of mass customer defections to a
competitor is a strong force .
• Apple counters this strong force by continuing to make substantial
capital expenditure in R&D enabling it to keep developing new and
unique products such as Apple Ipad pro and Apple watch and by
building significant Brand loyalty .

16. BARGAINING POWER OF Apple
SUPPLIERS (Weak force)
• Apple experience the weak force of the bargaing power of suppliers.This
component of porters Five forces analysis model indicates the influence of
suppliers in imposhing their demands . In apple case suppliers have a weak
bargaining power based on the following external factors.
1. High number of suppliers.
2. High overall supply.
Even though Apple has less than 200 suppliers of components for its products , the
company has more options because there are many suppliers around the
world.This condition makes individual suppliers weak in imposing their demands
on firms like apple . In relation there is a high level of supply for most
components of Apple products. Thus, this part of the five Forces analysis shows
that Apple does not need to prioritize the bargaining power of suppliers in
developing strategies for innovation and industry leadership.
EXAMPLE : GLU MOBILE INC. MAKES 64 % REVENUE FROM APPLE IMPLYING ITS
MAJOR DEPENDENCY ON APPLE. SO SUPPLIER BARGAINING POWER IS LOW.

17. BARGAINING POWER OF Apple
SUPPLIERS (Weak force)
• APPLE REDUCE The power of module chip
makers by designing its own module chips.
• Apple reduce the power of manufacturer like
foxconn by buying manufacturing equipment
and only allowing the equipment to be used
for Apple products.

18. THREAT OF SUBSTITUTES OR
SUBSTITUTION(WEAK FORCE)
• The threat of substitution is weak in affecting Apples business. This
component of porters five forces analysis model determines the strength
of substitutes product in attracting customers.In Apple case substitutes
exert a weak force based on the following external factors.
1. High availability of substitutes
2. Low performance of substitutes
Substitutes to Apple products are readily available in the market . For
example , People can easily use digital cameras instead of the iphone to
take pictures. They can also use landline telephone to make calls.
However these substitutes have low performance because they have
limited features.Many customers would rather use apple products
because of their advanced features. Thus substitution has a weak force
in impacting Apples business . This part of the five forces analysis shows
that apple does not need to prioritize the threat of substitution in
business process like marketing and product design and development.

19. CONCLUSION
• Threat of new Entrant Moderate force
• Bargaining power of supplier Weak Force
• Bargaining power of buyer Weak force
• Competitive rivalry Moderate force
• Threat of SUBSTITUTES WEAK force

20. CONCLUSION
Considering these five forces Apple must focus is
attention on competitive rivalry and the
bargaining power of buyers. The analysis
supports Apple current position of continious
innovation. The firm effectively address the five
forces in its external environment, although much
of its effort is to strength its position against
competitors and to keep attracting customer to
Apple products.