Porters 5 Forces

Threat from PC Industry 4 wheeler passenger vehicle industry

Suppliers

High - Microprocessors ,
Operating System Providers ISVs
Wintel - Network Effects
Low Small, localized & fragmented
suppliers, dependent on manufacturer
Buyer High More Aware With greater knowledge
about computers, buyers demand features,
better prices .
High Availability of largely similar
products, low switching cost, price
sensitive end users
Rivalry High - Many fragmented players fighting on price.
Each aspiring to be the industry leader.
High Many players in each segment
offering similar value propositions.
Substitutes Medium - Though not threatening the existence
of PCs , PDAs, smart-phones are already seen as
future alternative to PCs eroding the exclusivity
and hence premium attached to PCs.
Educational institutions, Govt. organizations etc,
still use PCs.
Medium - Two wheelers, public transport
system, railways.
But high switching cost because buying
and selling car takes time and effort.
New Entrants High- PC components were standardized & easily
available . Low barriers to imitate as easy to
assemble.
Low Highly capital intensive industry,
need to build supplier networks,
distribution channels, technical know-
how etc.
New Game Strategies
Apple (New Game: Across the board) Tata Nano (New Game: Selective)
Focus on entire market
to give an easy-to-use computer in the hand of
every man, woman & child
Fundamental changes to business and industry
structure
Proprietary design & OS
Not open for cloning
Focus on enriching user experience by
superior graphics, sound and design,
which was a first for the industry
Conventional wisdom irrelevant
Apple controlled all aspects of its
computer, unlike IBM
Customer focus rather than enterprise
focus
Achieving vertical and horizontal
integration


Focus on small and latent market segment
Ultra low cost car
Fundamental changes to business and industry
structure
Rs 100,000 car that redefines the industry;
created a completely new segment
Suppliers given the ownership to customize
Conventional wisdom refuted
Complete overhaul of every aspect of car
design.
Motorcycle dashboard used
Rear engine, one injection valve with 2 spray
holes
70% fewer parts in door handle

Apple failed to identify industry trend which moved towards open platforms & cross licensing which
eventually hindered their across the board strategy
Internal Competitive Advantage
Apple Tata
Value Based
Advantages
Vertical Integration (Both
hardware and software)
Design capabilities
Propriety OS
Capability to share synergies amongst the large number of
companies under the TATA umbrella. (Ex. R&D, Financial
backup, supply chain)
Experience in supply chain and distribution
Strong R&D focus (2000 engineers across India, Spain, UK
etc.)
Rareness Utility based design
(Known for its user-
friendliness)
Trust in brand name of TATA built over the years
Imitability Socially Complex Resources
Innovation based culture
Firms culture built on
reputation, teamwork, trust;
difficult to imitate.

Developing software for
proprietary hardware; not licensed
out for cloning

History
Historical associations (Ex. With
Mercedes Benz)
Access to resources
Numerous small decisions
CSR initiatives
Employee friendliness, supplier relationship
Socially Complex Resources
Company culture aims at maximizing value for
customers
Organization Visionary leader in Steve Jobs
Computers were Jobs and
Wozniaks toys to be used for
fun.
Made it easier to make user
friendly computers
Visionary leader in Ratan Tata
Experience in handling big projects
Management Base (TAS)
Meritocracy
Sustaining Competitive advantage
Requirement for
imitation by
competitor
Apple Tata
Identification Identifiable Targeting niche
segment
Identifiable Targeting niche
segment
Incentive for
imitation
High incentive
- Premium price
- Apple is only player
High incentive
- Largest growing segment in
India
Diagnosis Causal ambiguity
- Changes in many product
development processes
along with changes in
marketing and
distribution processes.
Causal ambiguity
- Changes made in almost all
production and procurement
processes.
Resource
acquisition
Difficult to replicate
- Expertise in both OS and
Hardware development.
- Top talent acquired due
to Apple brand.
Difficult to replicate
- Technical prowess
- Positive synergies with
collaborators