THREATS OF ENTRY: When an industry earns a return in capital in excess of its cost of capital, it will attract more firms outside the industry. Threat of entry rather than actual entry may be sufficient to ensure the established firms constrain their prices to the competitive level. Apple has introduced the first generation of the IPod classic 5GB for US$399. The product line has evolved into the fifth generation of the IPods classic starting at US$249. Similarly Prices of iPads first generation started at US$499 for 16GB but iPad4 is available for US$399. Apple has adopted lean production by minimizing unit cost and by maximizing output.
Apple has threats from already existing companies in cell phone industry they can provide similar o comparable devices at lower rate such as LG and Samsung. Microsoft and Google can also enter in cell phone or tablet industry in order to have their share in this market.
But Apple has competitive advantage of differentiated products. Apple launched 9.7 inch tablet PC, the iPad. Using a multi touch screen, users could listen music, watch video, brows internet, play games, read e-book, and so on. The in built battery lasted for 10hours of video and 140 hours of audio playback.
Apple goes against outsourcing the resources. Apple has decided to open its own stores to service its customers and sell Mac computers, software, iPods, iPhones, iPads, third party accessories and other consumer electronics.
RIVERLY BETWEEN ESTABLISHED COMPETITORS: Sometimes when new firm enter into the industry already exiting firms reduce their prices or focus on advertising, innovation other non price dimension. Dominant firm can exercise considerable discretion over the price it charges such as Apple in MP3 players.
At that time when Apple was developing iPad Microsoft was also pursuing its own tablet but there were conflicting visions for its development within the corporation. And it was misstep at Microsoft.
The competition in the Industry among the giants is very high. All the competing companies are aiming for a larger market share, low price and product differentiation. Apple is known for its diversified work in the technology sector. Apple is not just limited to the personal computers industry. It also makes system software and many other application programs. Due to this diversity the company has many rivals. Some of the close competitors of Apple are Hewlett-Packard Company, Google etc.
The company's best-known hardware products include the Macintosh line of computers, iPad. Its small size iPad has a huge emerging market. Its competitors in this field are Dell, HP etc. Competition to Mac OS X – its biggest competitor is Linux. Apple Music Player is far ahead in competition but Samsung, LG are its major competitors.
Apple price is known to be above average in the industry. But the company is using a differentiation strategy and focuses more on innovation, and quality. The product differentiation in Apple products is its main advantage over its rivals.
BARGAINING POWER OF BUYERS: The firm in an industry competes into two types of markets: in the market for inputs and the market of outputs. In input markets firms purchase raw materials, components, and financial and labor services. In the market of…