Branded PC Industry Analysis

Naveen[PGP29241] | Pankaj Nag

Sumeet [PGP29257]| Tarun [P
1A. THE THREAT OF RIVALRY

Sl. No.
1
2
3
4
5
6
7
8

LOW

MED

HIGH

Number of Competitors
Industry Growth
Fixed Costs/ Storage Costs
Differentiation
Switching Costs
Openness of Terms of Sale
Excess Capacity
Strategic Stakes
*HerfindahlHirschman Index
1B. THE THREAT OF RIVALRY- BARRIERS TO EXIT
Sl. No.
1
Asset Specialization

1
1

Ind. Attractiveness
2
3

3
3
1
3
2
1

LOW

MED

HIGH

1
1

Ind. Attractiveness
2
3

2
3

Fixed Cost of Exit

Govt. Restrictions
AVERAGE

2.1818181818

2. THE THREAT OF ENTRY

Sl. No.
1
2
3
4
5
6
7
8
9

LOW

MED

HIGH

Economies of Scale
Product Differentiation
Brand Identity
Customer Switching Cost
Access to Channels
Capital Requirement
Access to Technology
Access to Raw Materials
Govt. Policy/ Protection
AVERAGE

3. THE BARGAINING POWER OF BUYERS

Ind. Attractiveness
2
3

3
2
2
2
3.6666666667

Sl. No.
1
2
3
4
5
6
7
8

LOW

MED

HIGH

Number of Buyers
Availability of Substitutes
Switching Costs
Buyers' Threat of Backward Integration
Industry's Threat of Forward Integration
Contribution to Quality
Contribution to Cost
Buyers' Profitability

Ind. Attractiveness
2
3
3

1
3
2
2
2

AVERAGE

2.75

4. THE BARGAINING POWER OF SUPPLIERS

Sl. No.
1
2
3
4
5
6

LOW
Number of Suppliers
Availability of Substitutes
Switching Cost
Suppliers' Threat of Forward Integration
Industry's Threat of Backward Integration
Contribution to Quality

MED

HIGH

Ind. Attractiveness
2
3
3

1
2
3
1
1

7
8

Contribution to Cost
Industry's Importance to Supplier

AVERAGE

2.125

5. THE THREAT OF SUBSTITUTES

Sl. No.
1
2
3
4

LOW

MED

HIGH

Availability of Close Substitutes

Switching Cost
substitutes' Price Value
Profitability of Producers of Substitutes

Ind. Attractiveness
2
3

3
3

AVERAGE

3.50

GOVT ACTIONS
Sl. No.
Industry Protection
1
Industry Regulations
2
Customs & Tariff Restrictions Abroad
3

LOW

MED

HIGH

Ind. Attractiveness
2
3

AVERAGE

5.00

OVERALL AVERAGE ATTRACTIVENESS

3.20

Section E Group 4
41] | Pankaj Nagar [PGP29245] | Ankur [PGP29256]
9257]| Tarun [PGP29258]| Shantanu [PGP29270]

ttractiveness
4

ttractiveness
4

ttractiveness
4

5
5

4
5
5
5

ttractiveness
4

ttractiveness
4

ttractiveness
4
4
4

ttractiveness
4

5
5
5
5

Section E Group 4
Nagar [PGP29245] | Ankur [PGP29256]
n [PGP29258]| Shantanu [PGP29270]

Assumptions/ Remarks
CR(4)=49.1%; HP, Dell, IBM, Lenovo, Acer major competitors; Apple's Share: 2.6%
10-15% overall growth; Mostly in Asia & Emerging Market; US (3%)
PC Manufacturers need to invest in facilities but can oursource as well; R&D expenditures
PC- Commodity now; But All vendors have been able to differentiate themselves on some parameter
Low switching (many competitors, many substitutes), Apple high (Brand loyal, SA with AT&T)
Apple has unigue terms in iTunes, iPhones, Mac Softwares
Economies of scale require large increments in capacity
Costs associated with exisiting the market are high; Hence strategic stakes are high

Assumptions/ Remarks
Apple produce specialized product, All players have unique products so can't be sold back

High fixed cost

No Governement Restrictions

Assumptions/ Remarks
Economies of scale is high; Threat of Entry become low and hence attractiveness is High
Product Differentiation is high; Customer Identify the products of major brands
Brand Identification is high for major players and customer loyalty is also there in case of Apple
Rely on suppliers hence the switching cost is high; Intel
Leaders have already captured the major distribution channels like AT&T, verizon
High R&D investment to produce diffrentiated products
Technology know-how is available to all players in the market
Raw Material can be made easilty available given economies of scale on the suplier side
No Govt restrictions on new players; Threat of Entry High

Assumptions/ Remarks
No of Buyers has increased; Led to increase in bargaining power of corporate clients
No major substitutes for Branded PCs.
Buyers can switch easily between brands.
Huge Capital and R&D requirement in the industry so no threat
Medium
Buyers demand quality of a particular type
Competition has pushed the prices low, Buyers demand low prices
Buyers will be price sensitive and hence will look for lower prices
High Bargaining Power

Assumptions/ Remarks
Many suppliers for keyboard,drives etc but only few for micro processor and OS
Standardised products; Substitutes are not available
Switching from one supplier to another for key components will be costly
Huge Capital and R&D requirement in the industry so no threat
Established players in high value raw material like OS and Micro Processor
Innovation by suppliers such as Intel contribute heavily to the product quality

Suppliers provide parts which are expensive and form a major part of the products costs
PC Industry is very important to the supplier

Assumptions/ Remarks
No major substitutes to PCs available;
Switching to any substitute of PC will involve huge investments
N.A.
N.A.

Assumptions/ Remarks
No such barriers
No such barriers
No such barriers