Apple Case Study

Apple Case Study

Over the past decade, Apple has become known as an innovative and superior company compared to many of their rivals in the industries that they compete in. This has not always been the case for them. They have been able to gain a competitive advantage over the industries that they operate by differentiating their products from competitors and by constantly being innovative.

The Personal Computer industry is an extremely tough environment to enter and compete within. Using Porter’s Five Forces Model, the Personal Computer Industry can be categorized very simply. This model provides companies with forces that shape the industry, which are: The Risk of Potential Entry by Potential Competitors, the Bargaining Power of Buyers, the Bargaining Power of Suppliers, the Threat of Substitutes, the Intensity of Rivalry among Established Firms, and complementors.

The risk of entry by potential competitors is rather low because economies of scale exist and established firms have already ridden the learning curve down to an extent that would make it almost impossible for new entrants to gain market share. Another potential problem that new entrants face is that brand loyalty is extremely high for established firms and existing customers are very unlikely to switch to another provider because of high switching costs. Switching costs refer to the time, money, and energy that customers invest once they have switched from a product offered by an established firm to that of a new entrant. These costs can refer to the cost of purchasing the new equipment, purchasing of new software, the time it takes to learn a new operating system, and the time or costs that a customer may invest in transferring his or her existing files to the new product. Another problem that new entrants must confront relies on the notion that personal computers have become commoditized through innovation and mass production. Mass production and standardization are key roles in the...