c) Analyse the Porter’s Five Forces of the chosen companyMichael Porter was established the five forces model ofanalysis in the year 1979 to analyse the competitive atmosphere in whichcompany or product are works. Besides that, it also help to determine andindustry’s strengths and weaknesses. Porter’s theory can be applied to anysector of the economy to indicate for the attractiveness and alsoprofitability.
Porter’s Five Forces is a business investigation idealthat supports to clarify the reason of different industries are able to put upwith different levels of profitability. This model is also broadly used toanalyse the organization structure of a company as well as its businessstrategy. Porter has identified five indisputable forces that show a part indetermining every industry and market around the world. The forces are alsocommonly used to measure competition concentration. These forces are includedthreat of new entrants, bargaining power of buyers, threat of substituteservices and products, bargaining power of suppliers and rivalry among existingcompetitors.
For the rivalryamong existing competitors is about the number of competitors and theirability to creep up a company. The amount of competitors more large, along withthe number of corresponding goods and services the competitors offer, and willlead to le less power of a company. Consumers and suppliers look for acompany’s competition if they are incapable to obtain a suitable agreement.When competitive rivalry is low which means that a company has greater power toperform what it wants in order to achieve higher sales and gain more profits.
If the competitors offering homogeneous products and services will lead tolower market attractiveness.For the factors of threatof new entrants is about a company’s power that affected by the force ofnew competitors into the market. The less amount of money and time it costs forthe competitors to enter a company’s market and it may be an effectiveentrants, the more a company’s situation will be considered as weakened. In theother ways, an industry with strong barriers to enter is a gorgeous factors fora company that would choose to run their business in a space with lesscompetitors.The forces of bargainingpower of suppliers is addresses how straightforwardly those suppliers canincrease the price of products and services.
It is caused by the number ofsuppliers of key features of product or service that about how special thesefeatures are and also how much it would be cost a company to change from onesupplier to another supplier. The less number of the suppliers with the more acompany depends upon the power seller holds.For the factors of bargaining power of customers which is about exactly deals with thecapability customers have to drive the amount of price become down. It is causeby how many consumers and buyers that a company has and how major each consumeris and also how much it would cost a customer to shift from one company toanother company.
The lesser and the more influential a consumer base will havethe more power it holds.For the last factors in Porter’s five forceswhich is threat of substitute services and products. The competitorsubstitutes that can be used in the position of a company’s goods or servicespose a threat. For instance, if a customer depend on a company to offer aservice or tool that can be replaced with another service or by acting out thetask physically. If this replacement is properly easy and low cost may lead acompany’s power to be weakened. Hence, understanding about the Porter’s FiveForces and how these factor apply to the industry that enable a companyregulate its business strategy to be a enhance use for its resources to createhigher profit earnings for its investors.
· Bargaining power of suppliers Vivo Smartphone Company as a new entrant in the high technologyindustry and facing a reliability gap and uncertainty among their possiblesuppliers. The insight about Chinese smartphone companies are producing lowprice simulations of Apple products that making them vacillate. However, Vivostarted some strategies to boost its trustworthiness but from those strategiessuch as open-innovation is the one that got from their right suppliers’associations.
Vivo’s importance on its unfamiliar business model was the keyfeature to give the sellers further assurance in Vivo smartphone. For theexample Vivo is using Hi-Fi in its smartphones brand which is about a highquality of sound created by hi-fi chips. Mobile chip maker agreed to supplythis processors because Hi-Fi sound quality of Vivo phone give a greatexperience that is never make out before. The supply chain had been energeticto Vivo’s future improvement, it has been depending on others countries for theassociation and technology. Nowadays, Vivo has verified in more than 100countries and regions as their brand with provide the best class technology aroundthe world of smartphones. Thus, Vivo also a substantial customer to theirsellers, therefore it consists of a stronger bargaining power than thecompany’s suppliers.
· Bargainingpower of buyersFirst and foremost, in the smartphoneindustry, as a consumers they can easily change their brands given by the largenumber of the competitors in the market. Vivo has own their target and specificconsumers such like people who want to purchase affordable with high qualitysmartphone compare to other like Iphone. Nonetheless, from the research thatstated about with a current purchasing power of almost 17,000 euros per capitain Germany market with every third person owns a smartphone and approximately80% of the new mobile phones are sold in Androids system. Hence, VivoSmartphone Company has offering high quality mobile phone at the competitiveprices and this will be one of the major advantages, along with thecircumstance that Vivo comes with the new operating installed system.
Anandroid system connect that agrees hundreds of thousands of progressive strongconsumers to modify and create new features. By given the capability of Vivo toexercise open innovation and figure out a community of consumers, it would bemore success implement loyalty among its users to cut down the opportunity of switchingthe smartphone brands.· Threat of substituteservices and productsSmartphones consist of two primary functions which is toensure people can connected through communication and the other one is abilityto distribute and contact to share information immediately. The substitutes canaccomplish one or more of these purposes include social networking, emails,internet services and others.Since the key substitutes product for mobilephones are laptop, tablets and Ipad, so the threat of substitute should beconsidered as low because of the additional multi-functionality services andalso the application using by the smartphones have over sole presentedtechnology products. The differentiates of Vivo from its substitutes and thecompetition is Vivo has its own perfect sound quality and vital photographywith cutting-edge technology with developing vibrant and modernization productsfor passionate youthful.
· Threat of newentrantsSince now is a technological era, the entry barriers forthe mobile phones industry is quite high because of many matters are obligatoryto be more success. Moreover, the market is soaked with the huge amount ofcapital that must be invested in the company. It is also to be considered toentry a smartphone industry, one of the features is their operating system.Vivo have their own Hi-Fi audio chips in smartphones, and it is compatible withhigh quality and best possible audio experience to the consumers. The costs ofproduction for the mobile phones actually are quite high and this industry areobligatory economies of scale.
For the product of Vivo company produce such ascamera also signified one of most important competitive advantages to theircompany because the photography is one the way for people to express and sharehappiness with others.· Rivalry amongexisting competitorsWithmajor brand entrants such as Samsung, Xiaomi, Huawei and Oppo are challengingand controlling in the smartphones industry so the competition is quite high.For the new competitors, they will find that it is very difficult to competeand achieve economies of scale and also market share among those brandcompetitors in the same industry. As can be said that, in this technologicalera, smartphone industry is one of the competitive environment with manychoices according to the users’ requirements and budgets. Competition ispassionate among their existing companies although there is no so muchdifferences in their own products, but the companies try to come out their newproduct in terms of services and application they obtainable. From the Vivocompany strategy throughout their mobile phones, they propose consumers aspecialised with high grade photography solution by taking high quality mobilephotography to the achievement of a nice picture.
It is also come along withobserving and recording all of the life’s marvellous moments compare to otherbrand in the industry.In the conclusion, this Porter’s Five Forces can allow Vivo Company to regulate its business strategyin a better practice of its resources to produce advanced earnings from itsinvestors.