More handpicked essays just for you.
Informative study on the birth to the present day of cell phones
Price elasticity of demand (Essay)
Price Elasticity of Demand essay
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Using a five forces analysis to understand how external factors drive innovation in the mobile phone industry
Michael Porter puts forward a model of analysis of industry structure called "Five Forces Model" in his book Competitive Strategy. He thinks that supplier bargaining power, buyer bargaining power, potential new entrants, threat substitute product and the rivalry competing sellers determined the profitability of enterprises. The profitability which significantly important to a firm is the fundamental element of existence and development. Moreover, whether a business can improve their profitability depends on whether they can respond to external environmental factors.
In mobile phone industry, the profitability closely related to the
…show more content…
There are always possible threats of new entrants in the mobile phone industry, not necessarily a threat to a new phone company but of new products from established companies. So the company might have less danger of further new entrants, but it has to be focused on the existing enemies.
What 's more, the new competitors always can drive innovation in the mobile phone industry. Because if the new competitors want to success in the industry, it has to have something different with other brands to attract the consumers, and this different thing symbolizes innovation in the mobile phone industry. Xiaomi, as a successful new entrant in mobile phone market in 2011, is a good example. According to IDC, in October 2014, Xiaomi was the third largest smartphone maker in the world, following Samsung and Apple Inc. and followed by Lenovo and LG. The smartphone that Xiaomi release is much cheaper than other smartphones, which contain high configuration as Xiaomi did. What Xiaomi has done, is to substantially eliminate the significant 20 percent to 25 percent cut retailers or distributors typically get, and pair that with the vision of earning profits from accessories and web applications within its eco-system (MIUI) instead. Because of the new consciousness of forging greater margins from the phones itself, they carve out a substantial market in a short time and become an effective competitor for the existing
orter’s five forces In determining the competitive intensity and attractiveness of the market, Porter’s five forces is a framework that would help analyze the manufacturing industry of Lincoln Electric and observe the external and internal environmental factors that influence business strategy development for companies within the industry. The five forces are assumed to determine competitive power in a business situation in which these five forces are Supplier Power, Bargaining Power, Competitive Rivalry, Threat of Substitution, and Threat of New Entry. These industries possess characteristics that protect the high profitability of firms, with that said, the threat of entrants within this market is relatively low. This makes entering the market difficult for new startup companies due to the high levels of entry barriers.
The 5-Force Industry Analysis first introduced by Michel Porter, Harvard Business School professor, a quarter-century ago. This theory examines the suppliers, buyers, product substitutes, existing firms’ rivalry and new entrants in a firm’s product market.
...d subscribed to AT&T network to utilize the smartphone. It will become threats when too dependence on Apple will influence on their brand images and make AT&T overshadow by Apple. This also will effect, if someday Apple not interested to collaboration again with them, so they will not be able to gain profit and recognize the market.
There are two reasons why a firm may perform well in an industry, either 1) the industry is attractive to any firm 2) the firm is better and outperforms it’s rivals. Porter’s theory therefore can be used to discover the markets that are attractive to firms or, in those which aren’t breaking down the five forces so a strategy for success can be developed. In general the firm with be more profitable if each of the forces is low, that is to say there is a low threat of new firms entering, if buyers and suppliers have little power over the firm, if there is a low threat from substitute products and if competitive rivalry is low.
Cutting costs by competitors is the most logical way for competitors to be more competitive in the market. By cutting costs, there are more profits to be made and to gain market share by offering lower cost substitute products. The industry is flooded by competition, but no other competitor of Apple really focuses on creating great technical upport or brand loyalty. (Elliot, 2014)Apple’s primary focus is to develop innovative products and create a unique product that consumers can depend on the being the most highly anticipated technological device while offering great service and support for these new products. Apple uses business model innovation which introduces new products that are compatible with each other such as iTunes and the iPhone or ipod. This has proven to be a very effective business model and competitors are trying to replicate the same model to their advantage. (Jakab, 2015) By being an innovator and first mover on this type of technology, it gave Apple the competitive advantage in the market. In order for competitors to be more effective in the industry, they must attempt to gain customer loyalty and offer a simliar business strategy to that of Apple if they are to be the industry
Supporting material/specific details: different factors come together when it comes to selling a phone, author Gerry Purdy states that one of the primary four influxes of selling a phone is: “Technology innovation –the degree of innovative technology that has been incorporated into the handset and the degree it’s made useful to the user. Technology alone without any way to make use of it gets a lower score.”(Purdy p.1).
In today’s current economic state, the likelihood of a company entering into a global market is inevitable. Multinational corporations (MNCs) such as Vodafone are required to standardise their Research & Development activities throughout the world in order to penetrate the market. This is achieved by obtaining new technological opportunities, such as the most up-to-date phones, thus maintaining a competitive driver in the market.
New entrants to an industry, with a desire to gain market share, will put pressure on prices, costs and capital needed to compete. It can affect the profit potential.
For assessing the industry profitability, Porter 5 Forces analysis tools were used to analyze one organization evaluation. In this case, the technique were used to analyze 7-Eleven Convenience Store specifically in Malaysia. Porter 5 Forces consists of 5 important area which is Threat of New Entrants, Bargaining Power of customers, Threat of substitute Products and services, Bargaining Power of suppliers, and competitive rivalry within the industry. Theoretically, the more powerful these forces in an industry, the lower its profit potential. The strength of each force differs by industry and changes over time. The competitive advantage that 7-Eleven has using these five forces is it has raised the barrier of entry for other competitors to enter the convenience store market as new competitors will require a huge capital investment in order to implement the information technology in their business in order to be competitive. Also, hypothetically being the first in the market, 7-Eleven could have made contracts with the Malaysia government to not allow other 24-hour convenience stores in the market for a certain time period, such as Astro had done, thus having a monopoly market in the beginning of their operations which will allow them to target a bigger market share.
Managers and strategists are often faced with a dilemma while trying to understand the determinants of profitability of industries they compete in as well as potential industries they may wish to compete. To this effect, several analytical frameworks are employed; the most widely used being the Porter’s Six Forces model. This paper seeks to bring to light the shortcomings of using the Porter’s Six Forces model as an analytical framework to determine which industries are profitable or not.
With ever increasing technology it is easier and more economical to manufacture these phones. This then results in more investors entering into the market and creating more competition
In 1990, Nokia Mobile Phones (NMP) was the smallest of the five business divisions of Nokia, with annual sales of $500 million and 3,051 employees. Jorma Olilla, the new president of NMP, in the same year led the division to become the world's second largest manufacturer of mobile telephones after Motorola in just a year and half later. Motorola and NEC, the close third competitor, were the dominant players with a combined 33 percent global market share, compared with NMP's share of 13 percent. During this period, the main customers of mobile phones were business users who could afford the high prices. The everyday consumers were not overly attracted by these high prices and limited functional phones. Despite these limitations, the cellular market was growing rapidly, which brought more Asian producers into the competition. To make the matter worse, there was much proprietary technology and equipment required for analog standards around the globe. The emergence of digital technology provided a hope for a uniform communication standard. As a result, NMP had to make a difficult decision regarding which technology to commit significant resources to.
In addition, if the smartphone model is updated, it obviously means the number of Smartphone manufacturing also increases. Then that means both companies will get more profit from launching new models and even the employees might also get some more compensations from the companies for achievements. The economy of the companies will get more profit even if one company gets more profits that another one. Contrarily, that will probably weaken the economic of all the demanders or users.
The year is 2014, the markets are changing constantly, and they always have to meet the needs of new consumers as well as old consumers. Mobile telephones have been in the retail and wholesale business for quite some time, and are only evolving from here on out. There are things that these cell phones can bring us that are major benefits in our everyday lives. Cell phones bring us maps, radios, address books, and even flashlights now. Cell phones have taken shape from a huge portable device to a more convenient thin device that can fit in your pocket. With time in any consumer market, the consumer adapts to the technology that makes their life easier. The constant innovation of cell phones has led us to smart phones, and these smart phones are capable of putting certain businesses out of the market. Businesses that engineered PDAs in the past were met with challenges because smart phones are able to match their productivity. Land lines have become useless since everyone can afford a mobile device now. Listening to music has also switched from a traditional CD Player/MP3 Player to an everyday smart phone.
... smartphone. The company has improved increasingly because the combination with the Nokia company. Away to insure that the company can stay on top is to increase the innovations to their devices. Nokia was once a mobile telephone powerhouse, but has struggled since smartphones hit the market. As part of Microsoft, it will have better footing to compete there, however Ballmer noted that Nokia remains a leader in non-smart with phones sold in developing regions. The company’s ultimate goal is growth for the platform. After years trying to regain relevance in the mobile industry, Microsoft’s Windows Phone operating system narrowly nudged ahead of theird-place BlackBerry in global smartphone shipments, now sitting somewhere in the neighborhood of five percent globally. In the end Microsoft has accomplished their goal as a company and plans to stay there for a while.