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