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Porter’s model Essay

The last of the forces in Porter’s model is the intensity of competition. If the competition is low then the dominant company will be able to raise prices and earn greater profits. But when the competition is high like it is in the computer market then there is a price war where prices have to be competitive to your competitors or you will have low market share and smaller profits. (Hill & Jones 84) Computers are the world’s most innovative product.

Whether you’re having your groceries scanned at the local supermarket, reading your e-mail messages through a portable phone, or traveling through E-Z pass toll booths, computers are an every and all day occurrence in everyone’s life. From the beginning of the computer industry, IBM has led the way and set standards in the computer market today. From computer mainframes to 3lb. laptops, IBM next to Apple has maintained its supremacy. Aside from Apple, other competitors have emerged into the computer market.

Hewlett Packard and Compaq are two primary competitors in IBM’s market sector dealing with laptops today. Since the dawn of the computer era IBM has held its position at the top of the computer industry. Being that IBM has maintained

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its credibility, it has held its position in the computer world with a lot of market power. This was the case up until about ten years ago. That was when its suppliers broadened their distribution lines and created a larger market for computers. This is a time when IBM needed to implement new computer strategies. The early 80’s is when it took hold of the laptop industry.

Realizing that what its strategy needed was to be very competitive with its competitors, IBM increased its research and development strategies to achieve its superb Laptop technology. (Research Insight) This was a dawn of a new era for portable computers. Apple computer industry was already competing in the market of computers, so along with Compaq and Hewlett-Packard these three companies posed threat and competition to IBM. After going through and analyzing the income statements between these three companies. You can notice a decline in Apple and IBM’s revenues over the past ten years.

For Apple computer industry it’s gross profit has declined form 3. 3 billion dollars in 1991 to 1. 7 billion in 1999 a 34%decline in revenue for Apple and IBM went from 42 billion in 1991 to 38 billion in 1999 a 4% decline in revenue. (Research Insight) On the other hand due to computer competition since 1992 and the introduction of new competitors and lower barriers of entry into the computer market, other companies have stolen market share from Apple and IBM. Hewlett Packard and Compaq, revenues have increased by 107% and 714% respectfully over the past ten years. By research in http://www. computer-village. com.

html you can come to find that this has taken place due to competitive advantages in R & D within these opposing companies. Once you’ve conducted a check into the components of laptop computers, you will notice most laptops use similar products within the computer make up, Microsoft and Intel being the two biggest suppliers of programs and hardware to computer production. Many of the main components that go into laptop computers are alike among competition. As you compare IBM, Compaq, Hewlett Packard, and Apple you will notice a lot of hardware similarities. For instance, all but Apple uses the Pentium III processor (www.

insite. com/computer comparison) where Apple uses there own processor called “PowerPC G4”. (http://www. apple. com) Along with Apple, most Laptops offer different systems to be installed depending on customer’s needs for the computer. (www. insite. com) For instance, whether the customer wants a laptop for business purposes, advertising and marketing, or video enjoyment they get their pick as to what computer will best suit their need. The first and most important decision you’ll make when buying a new computer system is whether to choose a Windows Laptop or an Apple “Power book”. The decision isn’t as easy as it used to be.

With the introduction of the low-priced, consumer-oriented “Power book” and an updated version of the operating system, Apple is on the rebound in both power and price. If you are looking for a computer that is easy to set up and easy to use you can find the “Power book” to give you the least amount of difficulties. Resource acquisition is another part of providing excellence in products or service. A search on IBM’s web site for acquisition revealed more than one-hundred articles discussing a recent company being ate up by IBM. IBM also has a department just for acquiring smaller business’, like business’ can apply to be acquired.

Is this not success? So, IBM designs all these new things that are supposed to make our work time more efficient. But does IBM use the things it produces? Does IBM really believe that it is speeding progress? You bet it does. I bet there is not one employee working for IBM that doesn’t own a IBM laptop. IBM believes in technology and in incorporating it in its work environment. At the start of every fiscal quarter, and the start of every fiscal year, IBM issues a letter to its stock holders. The letter discuses the company’s financial outlook, major changes in the company’s strategies, and things to be expected of the industry.

IBM uses last years numbers to evaluate results and make changes. It shares its financial performance with everyone (website is “annual report” mentioned above). IBM is never satisfied. They will continue to be innovative, and strive to progress. Change is IBM’s nick name, because it is a company that is constantly in transition that is always finding new ways to meet customer’s needs.

Bibliography: www.britannica.com Hill, C. & Jones, G. Strategic management: an integrated approach, 5th ed. Houghton Mifflin Company: Boston. 2001.

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