Analysis Of Porter's Five Forces In The Computer Industry

830 Words 4 Pages
Porter’s 5 Force Model on computer industry Porter argues that the threat of new entrants into the market threatens the current level of profits enjoyed by the current industry participants. Entry into the computer industry is characterized by high capital requirements due to high investment required. Computer industry has superior and established brand identities that enjoy the industry economies of scale and fully developed distribution channels, making is the barrier of entry high for new companies. Product differentiation in the computer industry also raises the barrier of entry for new entrants since the current market leaders have developed products to meet specific needs of the customers rather than selling generic products. The bargaining …show more content…
Maverick Inc. seeks to provide the market with the highest quality products at the possible lowest price. The company ensured that they supplied standardized products to the market at the best lowest product while minimizing the cost. The company copy’s the product designs from the best firms in the computer industry and produces them at a lower cost, which enables them to sell at a lower price. A major success for this strategy was that the firm did not affect the standard and quality of the goods while reducing costs and the goods were acceptable to the customers. The strategy however failed as a result a result of new market entrants with a similar business strategy.
Lawn furniture industry analysis using Porter’s 5 forces model
Bargaining Power of Suppliers The lawn furniture industry is characterized by low bargaining power of suppliers. The industry has a highly fragmented distribution system. There is also high competitive rivalry among the distributors hence lowering their bargaining power. Law furniture has multiple distributors.
Intensity of Competitive Rivalry
The rivalry of firms in the industry is very high due to presence of multiple retail outlets, such as department stores, hardware stores as well as garden outlets among others. Dominant firms are also expanding and posing high competition to the existing
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The customer base for law furniture products is limited to the 25 to 44 years age bracket. Customers over 45 years purchase furniture products for replacement purpose which implies that their pressure to acquire new products is relatively low.
Business-level approach utilized by Maverick’s lawn furniture division
Maverick Ltd used the broad differentiation strategy in its lawn furniture business division. Allan changed the business to a more national focus, which increased the market scope of the business and consequently increased the amount of sales made. Sales increased from $150,000 to $52 million two years after Allan inherited the business. A major weakness was that Maverick was not able to shield from competition from new market entrants who utilized the low cost leadership strategy.
Recommendations
Maverick Ltd definitely needs to change its business strategy and align them with the current market changes in order to improve its competitiveness. My recommendations for the company for the two business divisions would be:
Lawn furniture

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