PORTER’S FIVE FORCES

&

VALUE CHAIN

A Description on Mobile Phone Industry

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PORTER’S FIVE FORCES

A mobile phone company

INTRODUCTION

Porter’s Five Forces methodology and a

tool used to analyze the business strategies and

to understand where power lies in a business.

This tool is a handy method to assess how each

of the market drivers impact the mobile phone

companies.

Suitable business strategies can be devised

based on the analysis. Further, mobile phone

company are known to study the markets they

want to approach thoroughly before they make

a move and it is in this perspective that this

analysis is undertaken.

FIVE FORCES FACTORS

Elements :

Industry growth

Informational over complexity

Fixed costs/value

Switching costs added

Intermittent over capacity

Product differences

Brand identity

Concentration and balance

Diversity of competitors

Corporate stakes

Exit barriers

RIVALRY

Mobile phones industries are engaged in fierce competitive rivalry. It makes

mobile phone companies cannot take its position in the market for granted as all these

where margins are tight and the competition is intense. Apart from this, they faced the

equivalent of the “Cola Wars” (the legendary fight for dominance between Coke and

Pepsi) in emerging markets like India where they have to compete with multitude of

players domestic and global.

ELEMENTS

Substitute performance

Cost of change

Time and cost of entry

Need specialist knowledge

Economies of scale

Cost advantages

Technology protection

Barriers of entry Numbers customer

Size of order

Differences between

competitors

Price sensitivity

Changing cost

Numbers of supplier

Supplier size

Ability to substitution

Standard of service

As the diagram above indicates and present the

relative strengths and the weaknesses of each element,

we can now conclude this analysis with the theme that

as the global economy integrates and more emerging

markets open up, companies like Samsung are at an

advantage because they have already established

themselves in many markets. However, it must also be

noted that each market is unique and hence, a company

must not adopt a one size fits all strategy and instead,

must approach each market differently. In conclusion,

Samsung can take pride from the fact that being an

Asian conglomerate, it has managed to break into and

hold its own against many western multinationals that

have been in this business for decades.

ANALYSIS

PORTER’S VALUE CHAIN

A mobile phone company

INTRODUCTION

Michael Porter’s Value chain concept is a valued concept in today’s market

because since it tells us to differentiate a products by analyzing the chain of events..

The value chain concept can be a reference model for Holistic marketing and

there is a chain of events which occur in a company right from the procurement of raw

materials to the delivery of goods as well as the post sales service. This chain is made

up of 9 steps and the process can be changed in any of the nine steps to add further

value to the final product. If a company wants to add customer value in all the

processes that it does, it has to refer to the Value Chain.

The Value chain contain of total 9 steps. The first 5 are the primary activities

which are the basics in any company and are the activities which provide strength and

sustainability to the company. The remaining 4 are the support activities or also known

as the secondary activities and these are used by the company for differentiation as well

as maintenance of the organization. Both, the primary as well as the secondary activities

are necessary for the firm to survive.

PORTER’S GENERIC VALUE

CHAIN

DESCRIPTION

Inbound logistics – this is about bringing raw material

from source to the company. This value helps

enhancing the quality of raw material as well as

optimizing the cost of inbound logistics.

Operations – all operations related in converting the

raw material to finished goods is the job of Operations.

The customer value is increased majorly in this step if

the operations are up to mark and the product is

manufactured in the right manner and meets quality

standards.

Outbound logistics – Sending finished goods from

manufacturing point to distributors and retailers.

Outbound logistic should be done in minimum cost

and the product is delivered to end customers with

minimum affect to the quality of the product.

Marketing and sales – The marketing and sales apply as

the strategy to increase the sales of the product. The company

exists to make profits and if profits can be increased by

marketing and sales, than the company has to use these tools.

Service – in mobile phone industry, the post sales service is

the most important because it directly affects the word of mouth

publicity of the product. If the service is not up to mark, no one

will buy the product and the brand will lose market share and

may be taken out of the market eventually.

Procurement – The management of vendors and the procurement of the raw material on a timely basis is

where procurement comes in.

Technology development – Keep product updated as per the latest technology.

Human resource management – The right people in the right place can make all the difference for the

company and hence the HR department is a support activity most important for the firm.

Firm infrastructure – Without a proper infrastructure, and lack of government handling or legal support, a

firm might face a big hurdle. Similarly, administration department will help in maintenance of the facilities in a

firm.

FINDINGS

As the new era raised in the new marketing field, with the mostly used of retail and e-

commerce, companies have realized that your value chain will be further strengthened if

you have better co-ordination between all the departments. Thus, the concept of holistic

marketing will further strengthen your value chain.

In such a case, a mobile phone company need to ensure that all your primary activities

have an open door policy for people from secondary activities and vice versa. Thus,

logistics should interact with procurement and sales with HR. If the important people in

your organization interact with other equally important people of different departments,

there is nothing that will stop value addition to the end product in your organization.

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