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Case Analysis Smartphone Industry in 2013: Samsung'S Dilemma Porter'S Five Forces Industry Rivalry

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Deepesh Kumar

The document analyzes Samsung's position in the smartphone industry in 2013 using Porter's Five Forces framework. It summarizes that industry rivalry was very high due to frequent improvements and shifting market shares among major players like Samsung, Apple, and Android device makers. The bargaining power of customers was also high given the wide range of products and options available in developing markets. The bargaining power of suppliers was moderate as key components like processors came from few suppliers while others were widely available. The threat of new entrants was high due to the industry's growth though barriers to entry were also high. The threat of substitutes was also assessed to be moderately high.

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Case Analysis Smartphone Industry in 2013: Samsung'S Dilemma Porter'S Five Forces Industry Rivalry

Uploaded by

Deepesh Kumar
254 views2 pages
The document analyzes Samsung's position in the smartphone industry in 2013 using Porter's Five Forces framework. It summarizes that industry rivalry was very high due to frequent improvements and shifting market shares among major players like Samsung, Apple, and Android device makers. The bargaining power of customers was also high given the wide range of products and options available in developing markets. The bargaining power of suppliers was moderate as key components like processors came from few suppliers while others were widely available. The threat of new entrants was high due to the industry's growth though barriers to entry were also high. The threat of substitutes was also assessed to be moderately high.

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The document analyzes Samsung's position in the smartphone industry in 2013 using Porter's Five Forces framework. It summarizes that industry rivalry was very high due to frequent improvements and shifting market shares among major players like Samsung, Apple, and Android device makers. The bargaining power of customers was also high given the wide range of products and options available in developing markets. The bargaining power of suppliers was moderate as key components like processors came from few suppliers while others were widely available. The threat of new entrants was high due to the industry's growth though barriers to entry were also high. The threat of substitutes was also assessed to be moderately high.

Copyright:

© All Rights Reserved
Download as PDF, TXT or read online from Scribd
Download as pdf or txt
254 views2 pages

Case Analysis Smartphone Industry in 2013: Samsung'S Dilemma Porter'S Five Forces Industry Rivalry

Uploaded by

Deepesh Kumar
The document analyzes Samsung's position in the smartphone industry in 2013 using Porter's Five Forces framework. It summarizes that industry rivalry was very high due to frequent improvements and shifting market shares among major players like Samsung, Apple, and Android device makers. The bargaining power of customers was also high given the wide range of products and options available in developing markets. The bargaining power of suppliers was moderate as key components like processors came from few suppliers while others were widely available. The threat of new entrants was high due to the industry's growth though barriers to entry were also high. The threat of substitutes was also assessed to be moderately high.

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CASE ANALYSIS

SMARTPHONE INDUSTRY IN 2013: SAMSUNG’S DILEMMA

PORTER’S FIVE FORCES

Industry Rivalry:

Two events that occurred in the industry in 2007 and 2008 drastically altered the competitive
environment and started a shift in the balance of power. The first was when Apple unveiled the
iPhone. Because of its fashionable appearance, touchscreen display, and user-friendly operating
system, the Apple iPhone immediately became a hit.
The debut of the first phone running the open-source Android operating system was the second
significant advancement. The tech giant Google supported this OS because it wanted to establish
a stronghold in the rapidly growing mobile market. After the introduction of the iPhone and
Android devices, the smartphone industry experienced an explosive growth rate and the
competitive rivalry in the industry became very high. The technology was constantly improving
and there were several and frequent shifts in market share of major players.
Major handset manufacturers other than Samsung included Sony, Motorola, Nokia, Blackberry,
HTC and Huawei. Google, Microsoft and Apple were major OS players that supported the
competitive ecosystem of the smartphone industry.

Bargaining Power of Customers:

Sales of smartphones were expanding quickly in China and India. In reality, China became the
world's largest smartphone market in 2012, overtaking the US. However, the majority of these
nations did not provide carrier-subsidized price plans, thus customers had to purchase the phone
themselves. This put pressure on handset manufacturers to cut prices, along with the reality that
most of these markets generally had smaller purchasing power. Therefore, the bargaining power
of the consumers was high as they may select from a wide range of products that provide them
superior value to price. Buyers may also stick to one brand owing higher value derived from the
usage of a particular brand’s smartphone.

Danish Nagar (P42014) | Purushottam Wankhede (P42034) | Prajjwal Singh (P42030) | Shivangi
Srivastava (P42042) | Shimul Bhagat (P42105) | Gaurav Tasiwal (F2004)
Bargaining Power of Suppliers:

Numerous technological elements, including memory chips, CPUs, screens, and phone casings, go
into the construction of a smartphone. Some of these parts are generally accessible, particularly
after they evolved into outdated technologies with low-tech parts. Others, like the microprocessor
and display panel, were more complicated and are only offered by a select few suppliers.
Therefore, the supplier power in the industry is moderate as only few components are supplied by
limited number of suppliers and others are widely available.

Threat of New Entrants:

The number of entrants in the smart phone industry is likely to increase, despite high barriers to
entry and low barriers to exit. The exponential growth in the smartphone industry and continuous
innovations make the industry a lucrative one to enter in. However, it is difficult for new entrants
to enter into the emerging markets, as setting distribution channels and supply chain is difficult in
these markets.

Threat of Substitutes: This threat is high within this industry, as the industry has many players
like Apple, LG, HTC, LG, Blackberry, etc and they all are battling over technology, design and
liscensing agreements. If any company is doing any innovative thing, other players soon adopt it,
like the Blackberry handset idea replicated by Apple, Samsung and LG. Switching costs for direct
substitutes are not very high for consumers. This also makes the threat of substitutes high. Samsung
relationshoip with Google also help them to grow together. In the industry, adding some features
or benefits for attracting customers includes cost, so all companies couldn’t able to provide the
more benefits in the same segment. But in Samsung's case, switching costs towards alternatives
become higher, and consumers may not switch to substitutes. This, in turn, will make the threat of
substitutes low. From the customer's side, many consumption matters are all about how individual
consumers perceive the value, making the product vulnerable to the threat of other substitutes.
Overall, the threat of substitutes is assessed to be moderately high.

Danish Nagar (P42014) | Purushottam Wankhede (P42034) | Prajjwal Singh (P42030) | Shivangi
Srivastava (P42042) | Shimul Bhagat (P42105) | Gaurav Tasiwal (F2004)

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