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Apple Computer Corporate and Business Strategy
International sales
• Outsource production.
Threats
• Continued industry price erosion
• Continued growth of “white boxes” cutting market share
• Vertical integration by Microsoft or Intel.
• Substitutes – PDA’s, WebTV
• International Competition
• Compaq entering mainframe market.
Exhibit 7 Herfindahl Index – PC Industry
Exhibit 8 Porter’s Five Forces Analysis-Personal Computer Industry
Factors Affecting Rivalry Among Existing Competitors
Characterization
(Current) Future Trend
Degree of seller concentration? HIGH HIGH
Rate of industry growth? LOW LOW
Significant cost differences among firms? LOW LOW
Excess capacity? LOW LOW
Cost structure of firms: sensitivity of costs to capacity utilization? HIGH HIGH
Degree of product differentiation among sellers? LOW LOW
Brand loyalty to existing sellers? MED MED
Buyers’ costs of switching from one competitor to another? LOW LOW
Are prices and terms of sales transactions observable? YES YES
Can firms adjust prices quickly? YES YES
Large and/or infrequent sales orders? NA NA
Use of “facilitating practices” (price leadership, advance announcement of price changes)? NA NA
History of cooperative pricing? NO NO
Strength of exit barriers? MED MED
Factors Affecting The Threat Of Entry
Characterization
(Current) Future Trend
Significant economies of scale? HIGH HIGH
Importance of reputation or established brand loyalties in purchase decisions? MED MED
Entrants’ access to distribution channels? LOW LOW
Entrants’ access to raw materials? HIGH HIGH
Entrants’ access to technology/know-how? MED MED
Entrants’ access to favorable locations? LOW LOW
Experience based advantages of incumbents? HIGH HIGH
“Network externalities”: demand side advantages to incumbents from large installed base? HIGH HIGH
Government protection of incumbents? LOW LOW
Perceptions of entrants about expected retaliation of incumbents/reputations of incumbents for “toughness”? NA NA
Factors Affecting Or Reflecting Pressure From Substitute Products And Support From Complements Characterization
(Current) Future Trend
Availability of close substitutes?