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Porters 5 Forces Essay Sample

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Porters 5 Forces Essay Sample

Threat of new entrants:

Since nokia was a profitable market. It becomes bait and other companies would like to join. Unless the new entry firms can be blocked, the revenue or profit will reduce. However in other to be able to compete with established firms, new entrants will need to invest highly in technology and marketing. Hence the threat of new entrants is very low.

Power of suppliers:

Nokia has a number of suppliers who provide them with equipment’s. Hence nokia could switch to any of them. Nokia is a global organisation so if their suppliers try to bargain for more money, they can simply move to other suppliers. However, nokia recently joined an alliance with Microsoft for their software therefore Microsoft will have a lot of power when bargaining for a share or price because the deal is more important or beneficial to nokia than it is to Microsoft. In conclusion, there is a moderate threat from suppliers because even though there are lots other software suppliers, Microsoft’s power of the software is high since there are very few companies who have the expertise and skills to rival

Microsoft Power of buyers:

Customers always have needs that need to be satisfied. However, consumers always seem to want more. It is the same with mobile devices. There are an increasing number of choices when it comes to the telecommunication industry hence; customers have a very high power to choose which one satisfies their needs. Nokia has a lot of competition and they all offer similar packages such as unlimited calls, texts etc. the industry is therefore very price sensitive with customers seeking out the best value for money. These days, most customers are tied down to contracts so switching to other phones will be expensive; hence they will not want to change until their contract is finished. Also nokia does not have a direct store where customers can buy handsets hence intermediaries such as vodaphone, EE and carphone warehouse makes it difficult for nokia to make a direct impact on customers and since customers are looking for the best deals, there is a price sensitive market.

Threats of substitute products:

Mobile phones have become a necessity in everyone’s life and it is almost impossible to live without them. This is because it has become a multifunctional device. One can make calls, surf the web, take pictures and do many more things on one device, hence any product that specialises in one of these individual functions becomes a substitute. For example, the camera function on a mobile device can be substituted for a digital camera which does an even better job than the camera on the mobile phone. To conclude, substitute products Have a low threat since mobile phones can make calls, take pictures, play music etc., the only substitute would be to buy all the functions of a handset in the individual products which makes it tedious to carry around.

Competitive rivalry:

Competitive rivalry is very high. Competitors have a very high threat on nokia especially with the growing popularity of AIM Blackberry, HTC and apple iPhone. Competitors have invested highly in marketing and R&B. Nokias market share continuous to fall because of its competitors. Because of nokias slow move in the smartphone market, Nokia just released the nokia lumia range. There is little or no difference between competitors therefore there is a very low temptation to get the range. Also since nokia does not have a contract plan with the telecommunication carriers it makes it very easy to switch to other products.

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