5 Porter for Samsung
The threat of potential new entrants (Low)
High capital is required to enter into the mobile industry. It is difficult to start up in an industry where the existing firms already operate on cost and differentiation strategies (Chan et al, 2011, p.12). However, with the commoditization of parts, finding vanilla solutions for a simple alternative product might be possible. Differentiation, however, is another story. New entrants would have issues with overcoming patent issues if they didn’t plan on investing in their own R&D to create a unique product. These things together would require a new entrant to establish a competitive brand name while achieving economies of scale via investments in a supply chain process and developing a distribution infrastructure to remain competitive. The costs of accomplishing these things make a very strong barrier to entry.
Even then, overcoming issues such as customer loyalty and switching costs would be another large barrier to entry.
The threat of substitutes (High)
For Samsung, almost any phone that performs the same functions as a Samsung phone could be considered a substitute. This includes other devices running the Android OS and not made by Samsung, (Motorola Droid comes to mind) as well as other devices like the Apple iPhone or Blackberry. All of these are in high abundance with similar cost and highly competitive.
The threat of substitute products within the industry, however, is low.
Although there is an increased popularity of Tablets, they are generally too bulky to be considered as straight substitutes. They don’t offer traditional mobile phone capabilities, which makes them inadequate. Laptops have the same problem. PDAs are no longer a viable substitute in 2011. For some time they had productivity features that the average mobile phone didn’t have, but now mobile phones have all those capabilities and more. With that said, the buyers’ propensity to substitute is low.
As for things like relative
High capital is required to enter into the mobile industry. It is difficult to start up in an industry where the existing firms already operate on cost and differentiation strategies (Chan et al, 2011, p.12). However, with the commoditization of parts, finding vanilla solutions for a simple alternative product might be possible. Differentiation, however, is another story. New entrants would have issues with overcoming patent issues if they didn’t plan on investing in their own R&D to create a unique product. These things together would require a new entrant to establish a competitive brand name while achieving economies of scale via investments in a supply chain process and developing a distribution infrastructure to remain competitive. The costs of accomplishing these things make a very strong barrier to entry.
Even then, overcoming issues such as customer loyalty and switching costs would be another large barrier to entry.
The threat of substitutes (High)
For Samsung, almost any phone that performs the same functions as a Samsung phone could be considered a substitute. This includes other devices running the Android OS and not made by Samsung, (Motorola Droid comes to mind) as well as other devices like the Apple iPhone or Blackberry. All of these are in high abundance with similar cost and highly competitive.
The threat of substitute products within the industry, however, is low.
Although there is an increased popularity of Tablets, they are generally too bulky to be considered as straight substitutes. They don’t offer traditional mobile phone capabilities, which makes them inadequate. Laptops have the same problem. PDAs are no longer a viable substitute in 2011. For some time they had productivity features that the average mobile phone didn’t have, but now mobile phones have all those capabilities and more. With that said, the buyers’ propensity to substitute is low.
As for things like relative