External analysis of Computer Industry
Porters Five forces model
* Threat of new entrants:
The threats from new entrants to the personal computer industry is weak to moderate due to the presence of dominant players reduces the entry of new players to immediately enter the market and establish their own brand. In such a competitive market, these companies have invested heavily on their research and development, customer service, and marketing departments which increased the competition between companies who are competing to build superior products. Due to increased standardization in operating system and microprocessors, it is easy for any new entrants to manufacture white-box personal computers. However, this would be low since the companies have created strong branding awareness. Some more reasons of why threats of new entrants are less are:- * Access to distribution channels: Being distribution channel most important in the PC industry, it is prerequisite to have a strong distribution network which is difficult to built for the new entrants specially in initial stages of competitive market. Weak distribution networks mean goods are more expensive to move around and difficult to reach end customers. The expense of building a strong distribution network positively affects Computer Industry. * Capital requirement: There is a high capital requirement in computer industry which means a company must spend a lot of money in order to compete in the market which is a big issue for new entrants to enter in this industry. * Product differentiation: It is difficult to make your product different from existing products offer in the market as it needs huge investments and R&D to get core competency in your product in the well settled industry with n number of large players with maximum market shares. * Switching cost: New entrants have to face high switching costs in this industry .High switching costs make it difficult for customers to switch from...
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