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Porter 5 forces analysis of Tablet industry

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David Genis

on 20 November 2013

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Transcript of Porter 5 forces analysis of Tablet industry

Porter 5 forces analysis of Tablet industry
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Tablet computers or just tablets
Tablet is a mobile flat computer.
Consists of display:
Display (most commonly touchscreen)

Tablet market share:
Porter 5 forces model
Bargaining power of suppliers
Bargaining power of buyers
Threat of potential new entrants
Threat of substitutes
Extent of competitive rivalry
I. The bargaining power of suppliers
1. Apple - Foxconn (contract manufacturing)

2. Samsung - Samsung Electronics

3. Asus - Asus
II. The bargaining power of buyers
Company - Manufacturer
Low bargaining power of suppliers is caused by several points:
- For a lot of companies in this industry there is no competition for a supplier, since each of them owns their manufacturing company or has a contract with one.

- As a result the production costs (prices) are low or at least fixed, which shows that there is 0 influence of suppliers on the business organization.
The majority of purchasers are regular customers.
Even though the amount of firms in the market is large there are dominating companies (Samsung and Apple) that are preferred by the customers.
There is no actual cost of switching from one product to another, however it may be difficult due to different operating systems.
There is only limited amount of time when a customer can return the product to the suppler.
III. The threat of potential new entrants
Possibility of economies of scale
Largely differentiated product
Requires cooperation with the existing companies to some extend (e.g. there is limited amount of OS on tablets)
Possibly lower costs of established firms
IV. The threat of substitutes
The closes substitutes for tablets are mobile phones and computers/laptops. The cost of switching to them is undefined as all the 3 mentioned products can be used for big variety of purposes.
However in between the companies there is a strong competition due to constant invention of new technologies. However there is a low threat of customers switching to a new up-to-date tablet due to their differences between each other (e.g. OS; software; external features).
V. The extend of competitive rivalry
The size of competing companies has a huge range.
Industry is growing rather fast due to growing number of sellers.
Fixed costs don't play the role as the production of the tablets has small percentage of the whole production for large companies.
Exit costs are low
Aggressive competition through innovation.
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