The personal computing industry had two main suppliers in 2010, one having significant bargaining power. The two main suppliers included one that made products with many sources and one that made products with few sources . The criteria used to analyze the bargaining power of these suppliers features: if there were a few large suppliers with many industry firms, if the suppliers’ product was highly differentiated, if there was a lack of substitutes to the suppliers’ products, if the suppliers’ product had high switching costs, if the suppliers posed a credible threat to entering the focal industry, and if the individual industry from was significant customer or not for the suppliers. Suppliers that Made Products that had Many Sources Suppliers …show more content…
Of these suppliers, there were only two large suppliers with many industry firms. For microprocessors, Intel supplied 80% of the market until competitors, such as Advanced Micro Devices and VIA Technologies, came into the market in the 90s. However even though competitors entered, Intel was able to remain the market leader with more advanced technology, manufacturing scale, and a powerful brand . Also for operating systems, Microsoft supplied the operating systems in over 90% of PCs. One of Windows’ greatest hits, Windows 7, was released in 2009 . Another competitor to Microsoft was Apple that created its own operating system called OS X v 10.6 Snow Leopard . Also, these suppliers had products that were highly differentiated. For Intel, they had more advanced technology than their competitors, making their products more up-to-date with the changing technological times. For microprocessors, Windows was very different from the Snow Leopard, containing different layouts and programs. Even though these two characteristics did not seem to make a huge difference, they were what attracted consumers to Apple’s and Windows’ products. They created a difference in what the consumer would buy. Next, there were no close substitutes for the suppliers’ products because the function of microprocessors and operating systems were non-substitutable. Lastly, there would be high switching costs for microprocessors and operating systems because they would have to develop all new computers to incorporate the new operating system and to have the ability to run the computer more
The current market is divided between a few powerful competitors that can relatively easily attract customers from one another as the switching costs are low and practical absence of product differentiation contributes to the easy loss of market share.
By 1993 Microsoft's windows computer programming function became the most widely used operating system in the world. When Microsoft was still an idea, Bill Gates led Apple to believe he would help them succeed in creating the best computer programming systems in the nation, however, Gates left it unknown to Apple he planned to release his own software. Gates took notes and allowed Apple to release the software he helped them to create. Then shortly after, Microsoft introduced windows. Apple claimed Gates had stolen their ideas, as windows looked surprisingly similar to Apple's version. Gates claimed he used his own ideas because it was his own that made Apple's renowned software. As Microsoft was leading in the world, Apple threatened Microsofts position in the world of technological advances by introducing a new software program that could potentially take Microsoft's top spot in the market away from them. Gates quickly said that he had created a new software that was set to release also, although he had no idea of new software at the time and made the excuse to possibly buy himself a bit of time. About eight months later, Microsoft released the new software program, as bill gates had proclaimed, retaining the top spot in the market. Microsoft's expansion today has reached every technological realm possible. Occluded in the newest developments are
Apple Inc. originated out of California in 1976. Steve Jobs and Steve Wozniak dropped out of college together to begin making technology in their garage. Apple’s technology skyrocketed becoming one of the top technology producing companies. They fell short in the nineties though, companies began to catch up and now there was more competition than before. Apple released their ipod in 2001, putting them back in the leadof the technology industry (The History of Apple). Presently, Apple is still exceeding other companies in the technology industry, such as Microsoft, Blackberry, Google and Hewlett Packard. Microsoft is Apple’s largest competitor, which is revealed through the Dupont analysis and other activity ratios, these particular ratios also make known that Apple’s numbers are not all accurate.
The existence of many large manufacturers in addition to the continuous entry by smaller manufacturers results in limited differentiation and decreased competitive advantage among PC manufacturers. All manufacturers have access to similar suppliers and therefore have the same buying power especially for processors which are sold at the same price to all manufacturers. It is clear that the competitive advantage in the PC industry is not sustainable as easy replication by competitors promotes price wars which lower profit margins for the industry as a whole. Ultimately, high competition and price fluctuations have led the PC industry to low profitability.
This led to intensive rivalry. Bargaining Power of Customers: High bargaining power because of stiff competition, and a large number of suppliers offering similar products to choose from. Bargaining Power of Suppliers: Bargaining power of suppliers is
Bargaining power of suppliers analyzes how much power a business 's supplier has and how much control it has over the potential to raise its prices, which, in turn, would lower a business 's profitability. (Arline, 2015).
The relationship with powerful suppliers can potentially reduce strategic options for the organization. 2 Bargaining Power of Customers Similarly, the bargaining power of customers determines how much customers can impose pressure on margins and volumes. Customer bargaining power is likely to be high when They buy large volumes, there is a concentration of buyers. The supplying industry comprises a large number of small operators.
Windows based computers are cheaper, and more easily upgradeable than Macintosh systems. The reason for this being that Apple has exclusive rights to the hardware made specifically for their computers. Windows based system hardware is produced by literally thousands of manufacturers. This, of course, means competition, which in turn lowers prices. Macintosh systems are sold (primarily) as a whole system, meaning that the consumer ends up with what Apple has decided should be included in the system. Windows systems, however, can be built to the consumers needs, or by the consumer themselves. They could select which component would be best for them for the price they would pay for it. Most importantly, with a Windows based system consumers could select what components they wish to have based on what they might pay for them.
Rivalry among established firms is fierce. There are several factors that illustrate this: established market players (6.1). The product is highly standardized and the switching costs of the customers are low. Players are aggressive (6.2)
Microsoft’s mission of placing a “PC running Microsoft software on every desk and in every home” drove their overall strategy early on. Depending on the business segment within Microsoft, one would see in place very different business models as the strategy for each line of business could vary. In the operating system (OS) segment, Microsoft initially brought in an existing product and modified this (MS-DOS) to work with the Intel microprocessor, which were the “brains” of the IBM PC. Microsoft partnered with IBM to provide the operating system for the IBM PC. In addition to developing Windows, Microsoft during this period was working to write applications for the Apple OS.
In regards to business practices, incentives are common tool used in negotiations. With that being said, Intel, a technology conglomerate, gave huge incentives to its customers for using computer-chip. Many would argue that Intel was wrong, while others would say Intel business practices were fair game. Below is a detailed report, discussing Intel actions.
Markets have four different structures which need different "attitudes" from the suppliers in order to enter, compete and effectively gain share in the market. When competing, one can be in a perfect competition, in a monopolistic competition an oligopoly or a monopoly [1]. Each of these structures ensures different situations in regards to competition from a perfect competition where firms compete all being equal in terms of threats and opportunities, in terms of the homogeneity of the products sold, ensuring that every competitor has the same chance to get a share of the market, to the other end of the scale where we have monopolies whereby one company alone dominates the whole market not allowing any other company to enter the market selling the product (or service) at its price.
The major competitors of Apple are Dell and Samsung out of which Samsung is the
In the early 1980s the top competitor in this industry was IBM due to its open system and ease of being cloned. During this same time, Apple struggled to keep pace and changed its competitive strategy multiple times. From 1980 to 1993 Apple positioned itself in the computer industry as the company that provides easy to use desktops with superior software and hardware. Unlike its competitors, Apple did not use “open systems that other producers could clone; instead they practiced horizontal and vertical integration and used Apple’s own proprietary design” (Pearce, 2013). It is this strategy that held the company back. Open systems were popular within the industry and customers enjoyed the flexibility of the systems
The bargaining power of suppliers is very low. Major players are vertically integrated for example KKD is producing their own equipment while others are partnering up with suppliers.