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The purpose of

Five-Forces Analysis
• The five forces are environmental
forces that impact on a company’s
ability to compete in a given market.
• The purpose of five-forces analysis is to
diagnose the principal competitive
pressures in a market and assess how
strong and important each one is.
The Major Players
The Computer Industry
•The total size of the IT market is now
projected to increase from US$14.5bn in
2009 to US$24.4bn by 2013.
•Sales of both desktops and notebooks
recovered somewhat in Q109 to record
sequential quarterly growth, but sales were
still down y-o-y.
•Faced with a sharp slowdown in global and
domestic computer sales, in 2009 the India
government announced a series of measures
to support the market.
•Service tax was cut from 12% to 10% and
excise duty from 10% to 8%.
Market Trend
 HP maintained its lead and gained share in PCs
(desktops and notebooks) to capture 18.2 per cent of
the India PC market in terms of unit shipments.
 HCL Info systems with a market share of 9.8 per
cent of overall PC Shipments
 Dell with 9.7 slipped to third spot in 1Q 2009.
 Acer's market share 7.3 per cent in 1Q 2009.
 Lenovo 4.7 per cent in 1Q 2009.

A total of 16,79,000 units of clients PCs (desktops


and notebooks) were shipped in the January-March
quarter of 2009. Desktop PC shipments of 12,13,000
units recorded a sequential growth of 9 per cent QoQ
while notebook shipments of 4,66,000 units recorded
a growth* of 3 percent QoQ.
Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants

Bargaining Rivalry Among


Power of Bargaining
Competing Firms
Suppliers Power of
in Industry
Buyers

Threat of
Substitute
Products
Threat of New Entrants
Threat of
Threat of
New
New
Entrants
Entrants

• PRODUCT DIFFERENTIATION.
Barriers to • SWITCHING COST.
Entry • ACCESS TO DISTRIBUTION
CHANNEL.
• CAPITAL REQUIREMENTS.
Porter’s Five Forces
Model of Competition
Threat of
New
Entrants

Bargaining
Power of
Suppliers
Bargaining Power of Suppliers

Suppliers exert power • SUPPLIER INDUSTRY IS


in the industry by: DOMINATED BY FEW FIRMS.
* Threatening to raise
• SUPPLIERS PRODUCT IS AN
prices or to reduce quality IMPORTANT INPUT TO BUYERS
PRODUCT.
Powerful suppliers • SUPPLIERS PRODUCT HAS FEW
can squeeze industry SUBSTITUTE.
profitability.
Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants

Bargaining Bargaining
Power of Power of
Suppliers Buyers
Bargaining Power of Buyers

INDIVIDUAL ORGANIZATIONAL
BUYER BUYER Buyers compete
with the
MODERATE HIGH supplying
industry by:
* Bargaining down prices
* Forcing higher
quality
Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants

Bargaining Bargaining
Power of Power of
Suppliers Buyers

Threat of
Substitute
Products
Threat of Substitute Products

• PDA.
Products
• SMART PHONE.
with similar
• PALM TOP.
function.
Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants

Bargaining Rivalry Among Bargaining


Power of Competing Firms Power of
Suppliers in Industry Buyers

Threat of
Substitute
Products
Rivalry Among Existing Competitors
Cut throat competition is more likely to occur when:

• MARKET SHARE.
• LACK OF DIFFERENTIATION.
• PRICE COMPETITION.
• DIVERSE COMPETITORS.
• ADVERTISING BATTLE.
Rivalry Among Competing Firms
 MARKET SHARE
4Q 2008 PC Shipments 1Q 2009 PC Shipments
(Desktop PCs + Notebook PCs) (Desktop PCs + Notebook PCs)
Vendor Market Share Vendor Market Share
Hewlett- 15.6% Hewlett- 18.2%
Packard Packard
Dell 11.0% HCL 9.8%
Infosystems
HCL 9.6% Dell 9.7%
Infosystems
Acer 7.7% Acer 7.3%
Lenovo 6.6% Lenovo 4.7%

Table 1: India PC Shipments: Top 5 Vendor Shares (% of units),


1Q 2009 vs. 4Q 2008*
*According to IDC’s Asia/Pacific Quarterly PC Tracker 2009, 1Q 2009 quarter, May 2009 release
HP Pavilion dv4 Lenovo G550
Dell Inspiron 1525
Intel® Core TM 2 Duo Intel® Core™ 2 Duo
Intel® Core TM 2 Duo Genuine Windows Vista® Home
Basic 32-bit Windows Vista Home Basic
Genuine Windows® 7 Home Basic
64-Bit 3 GB DDR2 SDRAM 15.6 " WXGA LED Backlight
TFT 1366x768
320 GB HDD
3GB Dual Channel 800MHz DDR2
SDRAM Rs. 41,990 Taxes & levies extra 3 GB PC3-8500 DDR3
SDRAM 1066MHz
Light Scribe Super Multi 8X
Glossy 15.6" Widescreen XGA
DVD±RW with Double Layer
320GB HDD 5400
Support
320GB configured with a 5400 RPM
SATA hard drive. 14.1” WXGA High-Definition HP DVD Recordable (Dual
Bright View Widescreen Display Layer)
DVD+/-RW with Dual Layer DVD+R
write capability Rs. 41,990 Rs. 35,750
Blu-Ray/CD/DVD Combo Drive Taxes & levies extra Taxes extra

Rs.34,900
Excluding tax
 STAGING ADVERTISING BATTLES
Sixth Force
• Complementors
MS OFFICE
OPERATING SYSTEM
OTHER APPLICATION SOFTWARE