January 5, 2012
External Analysis: Porter’s 5 Forces Comparison
Nokia vs. Amazon.com
Nokia is a multinational communications corporation that is headquartered in Finland and engaged in the market of manufacturing of mobile devices and in converging Internet and communications industries, with over 132,000 employees in 120 countries, sales in more than 150 countries and global annual revenue of over €42 billion and operating profit of €2 billion as of 2010. Nokia produces a wide range of mobile devices and offers Internet services such as applications, games, music, maps, media and messaging through its OVI platform. Its global device market share was 23% in the second quarter 2011.
1. Supplier Power
For both software and hardware providers, there are numerous mobile operating systems providers and hardware manufacturers, options are plenty, hence the bargaining power of suppliers is low.
2. Buyer Power
Buyer’s bargaining power is high. There is a large choice of products and very limited differentiation of those products. Demand is elastic and highly sensitive to economy. Buyers have all the required information about alternative products, and there are low switching costs (depending on the mobile plans provided by the service provider)
3. Rivalry among existing firms
Competition is intense among existing players. The differentiation among existing products is diminishing. However, players continue to differentiate in terms of applications and services offered.
4. Threat of Substitution
Generally, there isn’t a direct substitute to the mobile phone industry. However, Smart phones do a wide variety of functions, so any product that specializes in one of those individual functions can also be termed as a substitute. Other formidable substitute products are notebooks, PDA, tablet PCs.
5. Threat of new entry
Huge capital requirement, high manufacturing costs, high R&D...