Apple Porters Five Forces

The computer industry in the UK is a very competitive market where there is a fight for who has the largest market share. Competition is very high as various marketing strategies are being used by the companies.

The computer industry is a combination of both Software and Hardware products. Apple computer is a manufacturer of both the software that is the operating system and the hardware which is the whole component itself which is the laptop and desktop namely iMac and Macbook. Analysis of this report is on the strategies being used by Apple to sustain and also increase its market share in the industry.Evaluation has been done on Apple’s SWOT analysis, the external environment (PEST analysis), Porter’s Five Forces and the Ohmae 3Cs Analysis. After critically analysing this it was found that there is a declining demand for Personal Computers as consumers are now switching to substitute products like the tablets and mobile phones.

Apple enjoys customer loyalty while still innovative in its designs and products. Research shows that Apple is the 5th largest in sales of personal computers in the UK behind HP, Dell, Acer and Toshiba as 2012 and that its pricing of its products is high compared to its competitors.In trying to increase its market share, Apple has introduced new and innovative designs and also increased its marketing; example is the Macbook Pro Retina display with very fast processors. In 2012, Apple was able to increase its sales of personal computers.

In conclusion, Apple should review its pricing strategy as UK is about to experience another recession which means the buying power of consumers will be reduced. Porter’s Five Forces Analysis This analysis examines the environment in which the company is located thereby helping to understand the competitive position of the company.The computer industry consists majorly of hardware and software. Below is the analysis of each of the five forces. Threats of New Entrants The PC market in the UK hasn’t witnessed new entrants.

Existing competition of the major companies like DELL, HP, Lenovo in the PC industry continue. Economies of scale, absolute cost advantages of existing business, customer loyalty and market entry capital requirements of the industry have made it hard for new entrants. Apple faces a low risk on threats of new entrants. Threats of Substitute ProductsThe Pc industry is presently witnessing a decline in the purchase of computers due to the increase in demand for tablets. According to industry sources, customers now prefer to buy tablets as they are cheaper and portable. Consumers as well as PC vendors and distribution channels continued to be diverted from PC sales by on-going demand for tablets and smartphones (IDC).

Although some of the major companies in the computer industry are also in the tablet market this hasn’t reduced the decline of demand for computers. Apple has the ipad series in the tablet market.Competitive rivalry within the Industry Threat of existing rivals is very high for Apple in current market. The market is segmented into the software and hardware.

Apple software is the MAC OSx operating system and its competition is the Windows and Linux but majorly with the former. Microsoft is the maker of the Windows operating system and it controls majority of the market. For the hardware market HP, Dell, Acer and Toshiba are doing better in sales to Apple. In 2012 these companies sold more computers (Gartner 2012) Bargaining Power of SuppliersApple hold a relative bargaining power with its suppliers for raw materials and some components are controlled inside the firm. Apple's products are complex in nature and have contracts with various suppliers. With Apple having several contracts with different suppliers it established a high bargaining power to its suppliers.

More bargaining power of suppliers can determine less profitability in any company (Smit, 2006). Apple published a supplier responsibility report to show their supplier standard (Apple, 2010).Bargaining Power of Buyers The design and uniqueness of Apple computers as well as the operating system which is the OSX which cannot be used on any other product except the MAC. The competitive substitute which is the Microsoft operating system controls more of the market. The brand loyalty Apple computers also enjoy which gives it low bargaining power of buyers.

Apple computer in the UK has a strong brand marketing and this allowed for increase in its sales in the last quarter of 2012.Apple recently launched the MacBook Pro with retina display with the fastest mobile processors with thin and light designs. The computer market in the UK is very competitive and the prices as well, Apple products pricing is on the high side but the innovation to which it brings and the brand loyalty which makes the consumer less price-sensitive. The distribution channel to which Apple sells its computer through online and direct stores allows for the degree of sensitivity upon the existing channels.