Apple Fairs with Respect to Michael Porter's Five Forces Model

This week we will take a look at how Apple fairs with respect to Michael Porter's Five Forces Model. The Five Forces Model is a commonly used model in Strategic Management for purposes of analyzing how the ability of a firm to generate or maintain a competitive advantage. The five forces in the model include 1) threat of entry, 2) threat of rivalry, 3) threat of substitutes, 4) threat of powerful suppliers, and 5) threat of powerful buyers. Let's begin with the threat of entry. It is a widely known fact that Apple essentially dominates the consumer electronics industry. In this particular force, consider the relentless effort that Apple puts forth into R&D. Each and every one of the company's products is very unique, even with respect to competitors, justifying that Apple has a very unique product offering. The threat of entry is relatively low, due to the fact that Apple has found a way to continuously differentiate its products from its rivals. Apple also has such wide-spread production that it can produce at a lower cost due to its economies of scale. These reasons all contribute to Apple's dominance in the industry with respect to new market entrants. Apple also does not have to worry too much about the threat of rivals. This was not the case prior to the introduction of the iPod and iPhone. Before the iPod and iPhone came along, most organizations within the consumer electronics industry put forth relentless efforts of R&D in order to introduce a product that was both new to the market and very unique. The problem for most organizations in this industry is that Apple had the most success with this before other firms. Once Apple introduced the iPad and iPhone, it quickly rose to the top and gained the advantage on rivals such as Samsung. Of course, it didn't stop there for Apple, as the company continuously innovated and introduced new products to the market. This is a good transition point into the third force, the threat of substitutes. It is evident that a simple smart phone could be viewed as a substitute to the iPhone, a simple mp3 player to the iPod, and a Samsung tablet to the iPad. If these goods are available, then how is it that Apple dominates in such great fashion? To provide two simple reasons, the company has achieved economies of scale, enabling it to produce at a lower cost, and Apple simply markets better than its competition. Apple's brand equity and brand recognition is so high and well known that it