An Analysis of Industry Forces Impacting Apple’s Performance: A Study Using Porter’s Five Forces Framework

Abstract

The main objective of this study was to identify different electronic industry forces that impact the performance of Apple Inc. using Porter’s five forces framework. The study adopted a desktop methodology. The buyers have moderate power as a result of customers' attraction to the brand. Still, also the availability of alternative products at lower prices gives the customers power to negotiate. There is a moderate power of supplies resulting from a wide industry demand and scarcity of the components. There is a low threat of new entrants in the electronic industry due to high capital investment, high research and development costs, economies of scale and strong brand loyalty. The availability of different products of similar functionalities makes the threat of substitutes to be high in the market like tablets and smartphones. The rivalry of existing competitors is high as the industry is characterized by aggressive price strategies. To maintain its strong position in the market, Apple highly invests in research and development to make its products differentiated and maintains its strong brand loyalty. Apple need to consider the consumers of low incomes as the products of Apple Inc. are regarded as expensive for this group and where the competitors are willing to offer substitute products and services at lower prices.