Porter s Five Force analysis for Intel

SUPPLIER POWER Importance of volume to supplier Differentiation of inputs Impact of inputs on cost or differentiation Switching costs of firms(INTEL to AMD) Threat of forward integration Cost relative to total purchases in industry THREAT OF NEW ENTRANTS Barriers to Entry Low margin on products Innovation (processor I7,I5) Economies of scale Capital requirements Brand INTEL

THREAT OF SUBSTITUTES -Switching costs(AMD) -Buyer inclination to substitute(AMD products) -Price-performance trade-off of substitutes

BUYER POWER Bargaining leverage Buyer volume(Market leader in processors) Brand identity of many buyers(DELL,HP) Price sensitivity(Competitive factor) Product differentiation(Architecture level Substitutes available(Product from AMD) Buyers' incentives(Discounted on volume)

DEGREE OF RIVALRY -Industry concentration -Industry growth -Product differences -Brand identity -Diversity of rivals -Corporate stakes

THREAT OF NEW ENTRANTS: - This industry requires heavy investment and need frequent innovation during product cycle. Which is a natural obstacle for any new company to enter in this industry? Though existing players like AMD can threat their market, depending on their business reach and strategies. AMD is already a leader in in server market. On the other hand INTEL is market leader in processors. Mother boards and other products INTEL have to compete with small players from Taiwan and China. Customers often demand for latest technology at cheaper rate so suppliers have to be advance in their technology, reading end consumer mind and changing market trends. Branded products are preferred on consumer end, thats another reason entry barrier being high compare to other industries. BUYERS POWER: - Some of the major buyers for INTEL are HP, Toshiba, DELL, Sony, Acer etc. Since most of the PC manufactures use INTEL products one of other way, thus one individual buyer have less bargaining power. Though, companies like DELL makes contract with INTEL to get discount on large volume of orders. One of the key strength of INTEL is innovation and efficient architecture, which enables them the upper hand to bargain with buyers compare to competitors.

Present business scenario INTEL is market leader in processors, but if AMD comes up with new technology which is superior to INTEL, that will create huge demand in the market which will can increase buyers power. SUPPLIER POWER :- Since AMD and INTEL are the only two big companies who manufacture parts for PC industry leaving less bargaining power with suppliers. These suppliers often deal in large volume of products to get more margins. Suppliers often have big competition from Taiwan and Chines manufactures who provides raw material or initial product on very cheap rates. THREAT OF SUBSTITUTES: INTEL is always been pioneer in industry innovations. They are the first who brought INTEL P4 technology for the PC industry and revolutionized by providing small in size but more efficient products. These are the innovators who shaped PC industry on different scale. As I mentioned earlier this industry requires innovations and heavy investment so threat of new companies is comparatively less but already existed players like AMD can be big threat in term of providing substitute products. Though AMD is also like INTEL in nature of products but true substitute for these products can be when consumer starts using mobile more or any other technology where you dont have to use PCs or processors. DEGREE OF RIVALRY: Though, INTEL is market leader in PC processor and motherboard technology but they are still lagging behind in server technology. AMD is the market leader in Sever technology. AMD and INTEL always have neck to neck competition. Both these companies have big band name and invest lot in innovation.

Porter

s Five Force analysis for IT Industry

SUPPLIER POWER Importance of volume cost and differentiation Switching costs is high Support and after Service Problem of Up gradation

THREAT OF NEW ENTRANTS Barriers to Entry High Margin on product Low entry barrier Economies of scale Capital requirements Brand doesnt matter BUYER POWER High bargaining power Price sensitivity(Competitive factor) Product differentiation(easy to fit) Substitutes available(So many IT companies) Buyers' incentives(large number of providers)

THREAT OF SUBSTITUTES -Manpower -low cost, security and reliability

DEGREE OF RIVALRY -Highly competitive industry -Industry growth -Product differences by value adds -Diversity of rivals

THREAT OF NEW ENTRANTS: - IT is essentially a very fragile industry. Most of the growth depends on the market and market growth. Threat of new entrants is very high in this industry, since initial cost of stabilising the company takes very less amount. In this industry companies grows and vanish in rapid manner. Talented human skill is required for this industry. Giving better working environment is the most challenging task for this industry. Proper wages to satisfy workforce help to reduce the threat of entrants in this industry. BUYERS POWER: - Buyers have very high bargaining power. Since there exist various number of IT solution providers so buyers can choose anyone. Standards of the service and product remain more or less same so there are very few areas of differences. Most of the time companies differentiate by providing support and after sale service which help them to bargain in future deals. This industry is all about reliability and efficiency. Thus more than quality of work and value added services, buys tend to come back. THREAT OF SUBSTITUTES: - IT industry emerged to support existing work load and increase productivity. Hence, if anything can substitute IT that is like going back to the manpower era. IT can be substituted by only low cost and more efficient IT environment, like evolving video technology to communicate or new science to do have calculations. SUPPLIER POWER: - For IT industry suppliers could be divided in hardware & software where bargaining power depends on several factors like order size; is it bulk order? Accordingly pricing differs. Here PC industry is the supplier where competition is really high so bargaining power of suppliers is low. Suppliers have several options to choose. Most of the time IT manager analysis the requirements of the company and orders for Hardware if software. DEGREE OF RIVALRY: IT industry is very competitive, having so many players in the industry brings competition and as well as low cost products for the end consumer. Today, IT is commodity rather than an advantage for anyone. Branding doesnt work in this industry, new comer of old companies, all remain on equal platforms. Sometime early movers benefited otherwise its always advised to follow. Imitating the technology is very easy thus giving rise high competitions