Oracle Case

1. Porter’s five forces model determine the structure of an industry. The framework evaluates this through the effects of rivalry, threat of entry, supplier power, buyer power, and the threat of substitutes. According to their website

Oracle is active in two different industries, business hardware and software systems.

Threat of new entrants | |

Average profitability of incumbents | 4 |

Incumbents have a cost advantage | 3 |

Learning curve advantage for incumbents | 2 |

Access to inputs | 3 |

Government policy | 2 |

Economies of scale | 2 |

Capital requirements | 2 |

Brand identity | 2 |

Switching costs | 4 |

Access to distribution | 3 |

Expected retaliation | 2 |

Proprietary products | 3 |

Average | 2.667 |

Power of Suppliers | |

Supplier concentration | 2 |

Importance of volume | 2 |

Input differentiation | 3 |

Input effect on company differentiation | 3 |

Switching costs of firms in industry | 3 |

Presence of substitute inputs | 2 |

Threat of forward integration | 4 |

Cost relative to total purchases in supplier industry | 2 |

Average | 2.625 |

Rivalry: Is about the intensity of competition within the industry. Oracle had several rivals that compete within the industry, although Oracle did not have true peers. Microsoft and IBM can be seen as the two major players, although the products are rather different. However, in specific products and services, Oracle face intense competition from smaller companies. But in recent years Oracle acquired a lot of these companies like Sun, Peoplesoft, Siebel and hereby reduces the competition1.

Rivalry | |

Exit barriers | 2 |

Fixed costs | 2 |

Industry growth | 5 |

Overcapacity | 2 |

Product differences | 3 |

Switching costs | 5 |

Brand identity | 2 |

Diversity of rivals | 3 |

Corporate skills | 2 |

Industry concentration | 3 |

Average | 2.9 |

Threat of Entry: This force is about the degree to which new competitors can enter the industry. In...