Due to a limited number of suppliers, bargaining power of suppliers is strong in the computer hardware industry. Suppliers are usually large, international companies giving them much power as there are few substitutes. Some retailers specialize in selling computer hardware only which strengthens supplier power. However some computer manufacturers rely heavily on retailers to sell their products, which weaken supplier power for these companies. Their power is also weakened by retailers who sell a wide range of products, so their net incomes are not reliant on computer hardware sales alone (MarketLine, 2012, p. 13). Threat of New Entrants For entry into the computer hardware industry, new companies find it reasonably easy for moderate success. Small scale businesses have the opportunity to drastically reduce outlays of capital by avoiding larger retail outlets. Online shopping has grown in popularity over the years, thus creating more opportunity for small retailers to build online operations. These online outlets will reduce fixed costs for all shoppers. However, avoiding larger more established companies like Apple or Hewlett-Packard becomes difficult as smaller companies look to become similar in scale. In order to compete with higher rates of success, smaller companies must consider the prices and tactics larger business use within the market. Overall, the threat of new entry is moderate for this industry. Threat of Substitutes Overall, the threat of substitutes in the computer hardware industry is reasonably low as the performance of modern PC’s is unavailable through other technologies. There are however, a few growing threats entering into the computer hardware industry. The first threat of replaceable
Due to a limited number of suppliers, bargaining power of suppliers is strong in the computer hardware industry. Suppliers are usually large, international companies giving them much power as there are few substitutes. Some retailers specialize in selling computer hardware only which strengthens supplier power. However some computer manufacturers rely heavily on retailers to sell their products, which weaken supplier power for these companies. Their power is also weakened by retailers who sell a wide range of products, so their net incomes are not reliant on computer hardware sales alone (MarketLine, 2012, p. 13). Threat of New Entrants For entry into the computer hardware industry, new companies find it reasonably easy for moderate success. Small scale businesses have the opportunity to drastically reduce outlays of capital by avoiding larger retail outlets. Online shopping has grown in popularity over the years, thus creating more opportunity for small retailers to build online operations. These online outlets will reduce fixed costs for all shoppers. However, avoiding larger more established companies like Apple or Hewlett-Packard becomes difficult as smaller companies look to become similar in scale. In order to compete with higher rates of success, smaller companies must consider the prices and tactics larger business use within the market. Overall, the threat of new entry is moderate for this industry. Threat of Substitutes Overall, the threat of substitutes in the computer hardware industry is reasonably low as the performance of modern PC’s is unavailable through other technologies. There are however, a few growing threats entering into the computer hardware industry. The first threat of replaceable
industry_analysis.docx