Tag Archives: porter’s five forces

Apple fails to address Chinese market effectively

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The global smartphone industry is growing at a rate of 50% a year, whereas the chinese smartphone industry has a growth rate of 108%.

Apple has recognized this opportunity of expansion by showing interest through the release of the iPhone 5C and official launch in Beijing. These are small steps. But are they effective?

A chinese handset provider, Xiaomi, is following Apple’s design, however runs on Android and sells at a price of $330, while iPhone5C is priced $733, the difference in price makes the iPhone unattractive to China. Also, Xiaomi sells to costumers online, rather than through a distributor like Apple, which incurs more costs. The Direct Buying Model helps Xiaomi establish demand information more quickly and provide access to customization. Another competitive advantage, Xiaomi customizes it’s own software, adding Chinese apps that are legalized by the government, where as AppleApps such as GoogleMaps is unavailable in China. Apple is facing a rivalry, only owning 4.8% of the chinese smartphone market share, where as Xiaomi owns 5%. The image of low-price-high-quality Xiaomi has established even edges out HTC.

Xiaomi vs Apple video- Discussion of the differences and similarities between the two companies. Very interesting!

Article source: “Taking a bite out of Apple“, published September 14th, 2013 from: http://www.economist.com/news/business/21586344-xiaomi-often-described-chinas-answer-apple-actually-quite-different-taking-bite-out

Blackberry’s downfall

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Blackberry in now in a state of having to cut 4,500 jobs in order to keep the business running. One of the factors that causes such great losses for the company are the large inventory charges caused by the new z10 Blackberry phone, who’s sales are low, USD $900- million losses from unsold phones. This is a sign of poor operation management.

The inventory charges relate to the text of “The Power of Virtual Integration: Interview with Dell Computer’s”, which explains how inventory charges can be minimized. The main goal of virtual integration is to blur the lines between suppliers, manufacturers and costumers. Blackberry is still using distribution channels, which increases inventory time, and costs.  Moreover, delay of launching their new system was one factor that contributed to their huge losses of the new z10.  At last, poor marketing and not enough support by the company lead to crash in sales and the company’s value.

Blackberry is in the struggle of rivalry- Porter’s five forces. Blackberry has huge competitors such as Apple Inc. and Google Inc., which are used as substitutes. The degree of rivalry is enormous.

Article: “Blackberry takes huge losses as sales collapse“by The Globe and Mail, published: September 20th, 2013.