Nov 02 2011
RIM’s stock dipped below $20 per share today, but that’s just one company. How is the rest of the industry doing with Porter’s Five Forces?
Rivalry is medium
- small number of companies develop operating systems (Nokia, RIM, Google, Apple) but more companies develop hardware
- Smartphones, are highly perishable products that depreciates quickly in the market. Producers need to sell quickly, which intensifies rivalry.
- The industry is still growing.
Threats of Substitutes is high
- While brands differentiate between different Smartphones to an extent, Smartphones in the same price range have mostly the same functions.
Buyer Power is medium to weak
- Weak: buyers are not concentrated and can not influence the price.
- Medium: Buyers can purchase from a rival, but a rival will not necessarily present the buyer with better incentives or prices.
- Weak: Some producers’ influences extend to their distribution channels. An example is Apple’s stores.
- (omitted due to word count limitations)
Threats of New Entrants is low
- Diffcult to enter: Smartphone production involves many patents and proprietary knowledge. Even established companies are embroiled in legal battles over patent issues.
- Difficult to enter: New entrants lack popoular brands, which are important to sales.
El Akkad, Omar. “Key events in RIM’s very bad year.” The Globe and Mail. 26 Oct 2011. 1 Nov 2011. <http://www.theglobeandmail.com/globe-investor/key-events-in-rims-very-bad-year/article2215083/?from=2221802>. Online.
Marlow, Iain. “RIM stock falls below $20 a share.” The Globe and Mail. 1 Nov 2011. 1 Nov 2011. <http://www.theglobeandmail.com/globe-investor/rim-stock-falls-below-20/article2221802/>. Online.
“Porter’s Five Forces A Model for Industry Analysis.” QuickMBA.com. 2010. 31 Oct 2011. <http://www.quickmba.com/strategy/porter.shtml>. Online.