Research In Motion Porter's Five Force

Porter’s Five Force Model

There are some different approaches available when measuring the profitability in a market, or industry. I choose to use the model by Michael E. Porter, where the profitability potential of an industry, described as the long run return on investment, is reliant on the degree of competition in the selected industry. The five forces that Porter mentions are; threat of entry, supplier power, buyer power, threat of substitutes and industry rivalry.

Threat of entry

The threat of new entrants into the market segment dominated by RIM is quite high. All the established companies in the mobile industry are possible entrants to the diversified communication services industry of RIM. Although RIM has up-to-now been able to take full advantage of its technological dominance in the market , there still remains the possibility of new companies to enter using older versions of the technology in a modernized and revamped way. A recently entrant to the market is Apple corp. with its iphone. Because of the dominance of RIM in its own lucrative segment it will always face the threat from new entrants.

Supplier power

The bargaining power of suppliers in the manufacturing face is considerably low in this industry, for instance, processors of the same architecture used by RIM is produced by many companies such as Intel, Freescale Semiconductor, Texas Instruments, Royal Philips Electronics, Samsung and STMicroelectronics. However, as I mentioned earlier there are different suppliers for the services that RIM is offering. RIM has to utilize the networks of existing mobile operators, and in some instances where there are a limited number or only one operator, the bargaining power of the supplier is elevated.

Buyer power

With increased choice of new smart phones in the market, the bargaining power of buyers is rising.

Threat of substitutes

New technology advancements pose serious substitution threats. The EDGE and 3G technology pose the...