Porter’s Five Forces
Porter’s Five Forces analysis is a model used for industry analysis. Apple plays a significant role in four businesses, namely the communication equipment industry, the music and video industry, the mobile phones industry, and the personal computer (PC) industry. Because its participation in the overall PC industry is comparatively small compared to its other products, only the first three industries shall be analysed here.

Apple’s overall business includes eight product lines: iPhone
, its related products and services; iPad and related products and services, Mac portables and other music related products and services, Mac desktops, iPod, software, services and other hardware (Apple, Inc., 2014; GCEIP, 2014).
3.1 Bargaining Power of Buyers
Communication Equipment Industry
Buyer power is moderate. Apple communications equipment caters to individual buyers, but each buyer has little bargaining power as he/she bargains for him/herself alone. If the company loses just one consumer, the effect on the company will be insignificant. Collectively, however, buyer power may be more significant, as switching costs are low. Fixed line telecommunication devices have a low degree of differentiation and there is little innovation taking place in this area, for which reason buyers are sensitive to price levels and could easily transfer from one supplier to another. Apple’s major competitors in this market include Lenovo, Nokia, and Samsung (GCEIP, 2014; CEIPUK, 2014).
Music and Video Industry
The bargaining power of buyers is moderate. As with the communications equipment industry, there are many buyers in this market, thus reducing their bargaining power. Offsetting this, however, is the low switching costs that enables customers to transfer brands quite easily. Also, there is a trend towards greater preference for online retail channels and digital download sales due to their greater convenience. Buyers are therefore sensitive to price, recommendations, availability, loyalty schemes, and brand image. In the global music and video industry, Apple’s key competitors are Amazon, Tesco, and Wal-Mart Stores (GMVIP, 2014; MVIPUK, 2014).
Mobile Phones Industry
The bargaining power of buyers is moderate. There are two types of buyers in this market, the retail outlets (e.g. Europe’s Carphone Warehouse, Walmart) which purchase handsets for sale to consumers, and the mobile network operators that now make their own retail sales bundled with the service they offer. The large retailers are at a disadvantage because they need to stock up on the latest innovations to meet end-user demand. When new innovations or models appear, unsold inventory of earlier models become obsolete. Apple is at an advantage because the firm is capable of forward integration – i.e., they conduct their own retail operations. As a result, buyer power is diluted. Apple’s closest competitors in this industry are LG Electronics, Nokia, and Samsung (GMPIP, 2014; MPIPUK, 2014).
3.2 Bargaining Power of Suppliers
Communication Equipment Industry & Mobile Phones Industry
Supplier power is moderate. There are only a relatively small number of large multinationals who supply parts and components to this market, reducing market players’ options when sourcing for products. While backward integration is difficult due to high costs of telecommunication manufacturing, it is however not impossible; for instance, British supermarket brand Tesco will launch its own smart phone device, which if successful and followed by other retailers will reduce supplier power. Aside from their scarcity, suppliers are also benefitted by the level of customer loyalty that firms develop for their manufacturers. Apple, however, is one of those few companies which sell their products online and which operate their own retail shops (GCEIP, 2014; CEIPUK, 2014).
Music and Video Industry
Supplier power is relatively high in the music and video industry. The suppliers in this industry pertain to the purveyors of content, such as the record companies, TV studios and film studios. End-user tastes drive demand, and when the particular content is specifically in demand then market players are compelled to stock on popular products so as not to miss out on revenues for songs, movies, or shows that have high appeal. Also, suppliers such as large film and TV studios tend to integrate forward, that is, they sell directly to the retail market through their own websites. In these situations, there is strong supplier bargaining power (GMVIP, 2014; MVIPUK, 2014).

Mobile Phone Industry
Supplier power is moderate in the mobile phone industry. Mobile phone manufacturers are much larger than their suppliers, and are therefore in a position to better influence supply contracts. Operating systems are vital components to smartphone manufacturers, but in the case of Apple and Blackberry the operating systems are developed by the manufacturers themselves, and therefore one element of supplier power is diminished (GMPIP, 2014; MPIPUK, 2014).
3.3 Threat of SubstitutesCommunication Equipment Industry
The threat of substitutes is moderate to strong, as product substitution may potential exist within the market. Landline phones and mobile devices are substitutes for each other, although mobile devices have the advantage of flexibility, portability and mobility. In developing countries, counterfeits may proliferate, drawing demand away from legitimate retailers, but such risk is gradually being eroded by regulation, law enforcement, and security measures. Cheaper second-hand products are also substitutes for new models, which may challenge the higher-priced Apple products in certain market segments (GCEIP, 2014; CEIPUK, 2014).
Music and Video Industry
The threat of substitutes, particularly from counterfeit media, is very strong; this becomes apparent when one considers that digital video and audio content are easily duplicated. Pirated titles appear online, on CDs, and more recently through streaming and file sharing websites. While lawsuits have been filed and litigation pursued in some cases, the lawsuits are so slow that by the time they take effect, damage has already been done that cannot be undone for the titles thus distributed. The same contents made legally accessible online also act as substitutes for the same content formatted on CDs and DVDs. Although demand for the latter may decline, there will still remain buyers who prefer their music or shows on a physical device (GMVIP, 2014; MVIPUK, 2014)
Mobile Phones Industry
The threat of substitutes is low. The threat posed by landline telephones as substitute for cellular phones is weak, due to the greater flexibility, portability and wide area coverage offered by mobile phone usage. Neither are laptops a strong substitute due to disadvantages in size, weight, and the capacity for outward calls (GMPIP, 2014; MPIPUK, 2014).
3.4 Threat of New EntrantsCommunication Equipment Industry
The threat of new entrants is moderate. There is a low degree of differentiation among the products and services that players in this industry can offer; this signifies that customer loyalty is low, and customers tend more to follow the brand of the manufacturer rather than the retailer. Since buyers can easily switch retailers, low cost entry into the market is possible. Entry barriers are thus low, and threats of new entrants is strong, despite the fact that more established and larger-sale retailers would have developed better relationships with their suppliers as well as enjoy economies of scale (GCEIP, 2014; CEIPUK, 2014).
Music and Video Industry
The threat of new entrants is strong, and entry barriers to this market are low. If the prospective player already runs a retail business, then entry into the market becomes easy. Switching costs among vendors is low, and enables customers to transfer among players depending on the price, stock or brand image. Larger players carry strong brand images; however, this alone will not be sufficient basis to draw market share away from new entrants (GMVIP, 2014; MVIPUK, 2014).
Mobile Phones Industry
The threat of new entrants is moderate. The popularity of smartphones continue to attract new players which offer the same features as the established brands, such as Apple and HTC. A good number of the more mature mobile phone manufacturers offer their own smartphones. A market for cheap feature phones thrives in developing economies. New entrants are nevertheless faced with challenges, such as the huge amount and the specialist skills and experience required for capital outlay for R&D in which Apple is well entrenched (GMPIP, 2014; MPIPUK, 2014).
3.5 Internal rivalryCommunication Equipment Industry
Internal rivalry in this market is low to moderate. The market for global communications equipment is highly fragmented; market participants are numerous and diverse, including large foreign companies as well as local independent shops. Competition is slightly more intense among specialty shops than it is for the larger firms that have a presence in several markets. Even so, competition tends to ease because the demand for digital communications products is still expanding, enabling all firms to acquire a reasonable share of the market (GCEIP, 2014; CEIPUK, 2014).
Music and Video Industry
Internal rivalry is strong, mainly due to the similar choice of products offered by competing players and the low switching costs among market players. Unless the content is originally produced or published by the player, it would not be able to sustain any long-term competitive advantage over its rivals as content and processes are common and indistinguishable (GMVIP, 2014; MVIPUK, 2014).
Mobile Phones Industry
Internal rivalry among mobile phone manufacturers is moderate, with the lion’s share of the market being shared among a few large and well-known firms (i.e. Apple, Nokia, LG, & Samsung). A second tier of smaller manufacturers are directed towards specific niches and do not really pose strong competition to the larger firms (GMPIP, 2014; MPIPUK, 2014).
Find out more from UK Essays here: http://www.ukessays.com/essays/marketing/pestel-five-forces-and-swot-analysis-of-apple-marketing-essay.php#ixzz3UOJMcZmHFind out more from UK Essays here: http://www.ukessays.com/essays/marketing/pestel-five-forces-and-swot-analysis-of-apple-marketing-essay.php#ixzz3UOJJo5FTFind out more from UK Essays here: http://www.ukessays.com/essays/marketing/pestel-five-forces-and-swot-analysis-of-apple-marketing-essay.php#ixzz3UOJFJT7p