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Porters Five Forces, Computer Industry

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The five forces involved with competition in the computer industry. I discuss the threat of new entrants, bargaining power of buyers, bargaining power of suppliers, the threat of substitute products, and rivalry.A) Threat of new Entrants: The threats of new entrants in the computer hardware industry, which is dominated by PC's, are currently low. The Industry is controlled by 5 key manufacturers that construct a barrier to entry for smaller computer manufacturers. Each firm has strong brand names and has the right mixes of resources and capabilities. Small firms lack the resources and capability of acquiring enough capital to compete with the larger firms.

B) Substitutes: The threat of substitute products is low. There is a strong presence of computers throughout society. There is one computer for every three people. There are variations of computers inside the industry, but there aren't any products outside the industry that can take the place of computers.

C) Bargaining Power of Customers: The bargaining power of buyers is high. Customers are readily able to switch to another product at little cost. Customers have a range of computers to choose from when making their purchasing decision. A high degree of rivalry between competing firms force sellers to lower their prices, increase their quality, and improve customer service. Armed with greater amounts of information about the manufacturer's costs and the power

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