Porter's Five Forces Analysis in the Personal Computing Industry: A Case Study of HP

This report examines the competitive landscape of the personal computing industry using Porter's Five Forces framework. It focuses on HP Inc., a leading player in the market, and analyzes the threats posed by new entrants, supplier power, buyer power, substitute products, and competitive rivalry. The report provides insights into the key factors influencing the industry's dynamics and offers recommendations for HP to navigate these challenges and maintain its competitive edge.

PORTER’S FIVE FORCES
ANALYSIS IN PERSONAL
COMPUTING INDUSTRIES

TABLE OF CONTENTS
Introduction......................................................................................................................................1
The personal computing industry....................................................................................................2
Overview of the organization..........................................................................................................3
Porter’s five forces...........................................................................................................................4
Threat of new entrance................................................................................................................4
Bargaining power of the suppliers...............................................................................................4
Bargaining power of the buyers...................................................................................................5
Threats of the substitute services and products...........................................................................5
Rivalry threat...............................................................................................................................7
Recommendations............................................................................................................................9
Conclusion.....................................................................................................................................10
References......................................................................................................................................11

LIST OF FIGURES
Figure 1: Top personal computing industries..................................................................................2
Figure 2: Statistical data of all top computing industries................................................................6
Figure 3: HP rivalry.........................................................................................................................8

Introduction
Porter’s five forces are the analysis tool which is used by the organizations to analyze the
competitive organizations which may become a threat to the existing organization. In this
analysis, there are five forces included such as- threat of new entry, supplier power, buyer’s
power, the threat of substitute product and competitive rivalry. This report will discuss the HR
manufacturing which provides personal computers and laptops in the market at large scale. This
report will provide information about the impact and factors of Porter's five forces in this
organization which create a future threat to the organization. Some of the competitive
organizations for HP organization will also be discussed in this report.
1

The personal computing industry
In the current time use of computers, software, laptops, tablets and other computing devices
increased in the market because people use these computing devices for their personal use also.
Industries with are dealing with personal computing has enhanced their market share all over the
world as they provide many essential tools at the workplace and home also. Personal computing
devices not only help to do the work in digitalized format but also help the people in personal
and professional lives to communicate with each other. Personal computers and laptops help to
access the internet and multimedia applications which bring huge changes in the technology
sector. Many organizations are dealing in the computer industries in which HP is one of the
leading organizations (Kirkpatrick, 2017).
Figure 1: Top personal computing industries
(Source: TAIPEI, 2013)
2

Overview of the organization
HP organization provides technologies, products, software, services and solutions to the
customers, SMEs (Small and medium enterprise) and also to a large sector of enterprises under
which customers of the government sector, education and health sector are also included. The
organization will operate these functions through printing segments and personal systems.
Customer personal computers, commercial personal computers, commercial tablets and mobile
devices are offered by personal systems segments (Overview of Hp Inc, 2018). This organization
produces a new line-up of the notebook, gaming of HP Pavilion, displays and desktops for
meeting the needs of the mainstream gamers. They use marketing strategies at a high level to
promote and advertise their products and services in the market. They not only focus on the large
or small industries as they provide computers and laptops as household also which will target the
individual customers also.
3

Porter’s five forces
The organizations always have a threat from their external stakeholders and from their
competitive industries that are dealing in the same sector. It is important and essential for HR
organization they need to conduct porter’s five forces analysis through which they can identify
the five factors such as- threat of new entry, supplier power, buyer’s power, the threat of
substitute product and competitive rivalry. With the help of this analysis, they can overcome the
competitive factors and make strategies to enhance their market in this computing sector (E.
Dobbs, 2014).
Threat of new entrance
New industries in the market bring innovation and new devices in the market which create threat
and issue for existing industries. The new personal computing vendors enter the market and
attain the significant benefits and market share which will bring the high threat to the existing
organizations. This is very tough for the organization to gain profit and distribute their products
and services in the market. It is also estimated and evaluated that in future nearby five computing
vendors can control the 70% of the market in computing sector. A new entrance in the market is
a threat for the already established organization because they bring low price strategies; reduce
their cost as compared to competitors and also provide a new value of the propositions to their
targeted customers (Rothaermel, 2016).
E-waste and environmentalists are the main stakeholders of the personal computing industries
and provide a high technology of trash such as- computers in the landfills, and now HP, Dell, and
IBM also start their computer recycling programs in the computer brands. For example, China
develops their operational system so that they can compete with the Apple, Google, and
Microsoft. Competition in the market is already intense, and that is why any new entrance will
bring high impact on the existing personal computing industries.
Bargaining power of the suppliers
Most of the computing industries are diversified as the computer system industries as they buy
their raw material from some suppliers in the market. Suppliers who provide raw material to the
industries are at the dominant position through which decrease the profit margin of the personal
computing industries. The powerful suppliers in the market in the computing sector use the
power of bargaining or negotiation to the high extract prices from the organizations. This type of
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supplier power will put a high impact on the profit margin and production of the organization. In
the computing industry, there are mainly three suppliers who are related to the personal
computing industries such as- software, hardware and service suppliers (Adi, 2015).
There are many suppliers in the market but organization selects only that supplier who will
provide standardized products with good quality and at an affordable price. For example, Apple
organization creates their operating system which is MacOs, but on the other side, Microsoft,
AMD, and Intel are the main supplier which provides operating systems to the personal
computing industries. These suppliers will use their bargaining power with the personal
computing industries like HP when they supply their software or hardware services to them.
There are some suppliers in the market, so that also creates huge competition in the market
which also enhances the power of the bargaining by offering advanced services.
Bargaining power of the buyers
In the advanced technology time, customers or buyers of the personal computers or laptops
become very demanding which also become one of the primary reason for bringing high
competitive in the personal computing industries. They demand the best and advanced featured
devices at the affordable price. This will put a major impact on the computing sector industry as
they need to cover all the requirements and expectations of their customers and bring innovative
products and devices in the market (Fung, 2014).
This type of pressure on the personal computing industries will put an impact on their long-term
growth and profitability ratio. The power base of the customers will bring high bargaining power
of the buyers. They seek to enhance the special offers and discounts offer which sometimes
reduce the profit margin of the industries, and they can bear the loss. The reason behind
customers bargaining is because they have many options in the market to buy the same product
and computing devices. Sometimes an organization needs to give high discounts and special
offers to their customers so that they cannot move towards their competitors.
Threats of the substitute services and products
When there are any similar services or products are available in the market then it will create a
threat to the organization, and the industry can suffer regarding their profit expectations. For
example- Google Drive and Dropbox are the substitute applications of the storage hardware
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drives which may reduce the demand and installation of the storage hardware drives. The threat
of the substitute products and services is huge if it will offer the value proposition which is
unique and different from the present product provided by the existing industries. As per the
research, it is identified that consequence of the industries that are dealing in the hybrid tablets
and phones will surely have lead to their customers replace by some of the similar or substitute
products in the market (Wang and Zhang, 2015).
Many customers will replace their old computers with the hybrid tablets and phones such as-
Microsoft Surface Pro. This type of replacing is helpful and effective for the customers as they
can use the new technologies at their single computers apart from the old computers. This is also
one of the biggest threats to the organization that has high goodwill and brand reputation in the
market and has a strong customer base. This may put a negative impact on the personal
computing industries as they lost their long-term customers.
Figure 2: Statistical data of all top computing industries
(Source: columbia.edu, 2018)
6

Rivalry threat
Rivalry threat will indicate the competitors in the market for the computing industries. Some
industries are dealing in the personal computing sector and create a competitive threat to each
other. Apple, Lenovo, HP Inc and Dell are some of the leading organizations which are
providing high technologies for personal computers, laptops, tablets and mobile phones. If the
rivalry between the existing computing industries is quite intense, then this will drive the down
prices and also decrease the profitability and production margin of the organization. Apple, Dell,
Lenovo or Intel organizations are the main and high level of the rivalry for Hp Inc which bring
competition for the organization and due to which they face many issues and competitive threats
(Persico et al., 2014).
Apple brings their applications and operating system which reduce their supplier bargaining and
substitute threats. They always try to bring innovate features and technology in the market which
attracts the customers most and bring rivalry threat for other brands. HP Inc also has a strong
portfolio in the market, but due to the high impact of competitive features, they may face issues
which are not beneficial to them. Dell is also named as one of the best ethical organization in the
entire world, and they always try to reach their customers by reducing the intermediaries
between them. So it is identified that Dell is also one rivalry industry for all the personal
computing industries.
7

Figure 3: HP rivalry
(Source: Felix Richter, 2017)
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Recommendations
It is important for the organizations to consider these recommendations so that they can reduce
and overcome the impact of Porter's five forces on their performance. To overcome the new
entrance threat they can bring innovation in their existing products to attract the customers. To
reduce the issue of supplier bargaining they can build efficient supply chain along with the
multiple of suppliers. By introducing large number of customer base they can reduce the
customers bargaining power. Personal computing organizations need to become service-oriented
rather than the product oriented. They can also reduce the impact of rivalry from the organization
by building sustainable differentiation. These recommendations will help the organizations who
are dealing in the personal computing to reduce the negative impact and overcome the financial
issues from their business. This will help to avoid their competitive impact and bring benefits for
the organization.
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Conclusion
This report has concluded that personal computing industries need to conduct porter’s five forces
analysis through which they can identify the issues or threats which are associated with their
business and create a negative impact for the organization. The threat of new entrance,
bargaining power of customers, buyer, the threat of substitute and threat of rivalry are the five
forces which are concluded from this report. This report will help the organizations to create
strategies through which they can overcome their competitive factors. This report has also
provided some of the recommendations through which they can reduce the negative impact on
the industries.
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References
Books and Journals
Adi, B., 2015. An Evaluation of the Nigerian Telecommunication Industry Competitiveness:
Application of Porter’s Five Forces Model. World, 5(3).
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
Fung, H.P., 2014. Using porter five forces and technology acceptance model to predict cloud
computing adoption among IT outsourcing service providers.
Kirkpatrick, G., 2017. Critical technology: A social theory of personal computing. Routledge.
Persico, D., Manca, S. and Pozzi, F., 2014. Adapting the Technology Acceptance Model to
evaluate the innovative potential of e-learning systems. Computers in Human Behavior, 30,
pp.614-622.
Rothaermel, F.T., 2016. Competitive advantage in technology intensive industries.
In Technological innovation: Generating economic results (pp. 233-256). Emerald Group
Publishing Limited.
Wang, F. and Zhang, X.P.S., 2015. The role of the Internet in changing industry
competition. Information & Management, 52(1), pp.71-81.
Online references
Overview of Hp Inc, 2018 [Online] [Assessed through]
<https://www.slideshare.net/NakulPatel/hp-quick-facts>, [Assessed on 21th April, 2018]
Statistical data of all top computing industries, 2018 [Online] [Assessed through]
<https://www8.gsb.columbia.edu/itg/students/laptopoptions/tips>, [Assessed on 21th April,
2018]
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