1.

Porter’s five forces: Porter’s five forces analysis is done to understand the industry

attractiveness of the smart phone industry. This five forces analysis is just one part of the

complete Porter strategic models.

1) Threat of new entrants- low The mobile phone industry is already a well established market

and the threat of a new entrant is quite low because

i) Capital requirement is very high to compete in the market like huge manufacturing

costs, high Research and development costs etc.

ii) Barriers like patents make it difficult for new competitors, because the best methods

are patented.

iii) Costumers loyalty towards existing brands.

iv) Advanced technologies make it difficult for new competitors to enter the market

because they have to develop those technologies before effectively competing.

v) All leading companies are fighting a fierce battle to gain more market share, so there

will be heavy retaliation towards any new entry.

vi) There is a constant push to innovate and launch new products. There are always

possible threats of new entrants in the Phone industry, not necessarily a threat of a new

phone company but of new products from established companies. So the company has

less danger of further new entrants but it has to be focused on the existing enemies.

2) Threat of substitute products or services-moderate Presence and availability of substituted

products is a great threat for the successful survival of the organization since it can enforce the
organization to cut the price of its product. i) The power of substitute products is moderate and

it depends on the impact of the substitute products. ii) Smart phones have two primary functions:

first to keep people connected through communication. Second is the ability to access and

distribute information instantaneously. The substitutes that can perform one or more of these

functions include social networking, landlines, newspapers, magazines, e-mails, internet services

etc. Many of the smart phones that are available on the market today are already available with

a variety of substitutes like social networking, e-mail, internet etc. iii) Smart phones do wide

variety of functions so any product that specializes in one of those individual functions can be

termed as a substitute. There are many substitutes if the buyer focuses on one of the functions,

e.g. digital camera can take better photos then smart phones, notebooks can surf the web just

as effectively and PDAs can plan a day the same way a smart phone can. iv) Regarding os, major

threat is from substitutes like apple’s iphone and other android devices. v) When the economy is

low the substitute for the smart phone is what we call the dumb phone which is very cheap and

can only be used for calling and messaging. In conclusion, the threat of a substitute product is

moderate due to the fact a smart phone is no longer just for making calls but for all the other

function as well are expected on all smart phones. So, the only real substitute is to buy all the

functions of a mobile phone in the individual products which would not be plausible to carry all

around on a person at the same time.

3. 3) Bargaining power of customers (buyers)-high Bargaining power of buyer is high so product

differentiation is an ideal way to add value to the buyer. i) The power that customers have is

rising because of the increasing number of choices in the mobile telecommunication industry and

very little differentiation of products. ii) Less asymmetric information which means buyers have
all the required information so they can bargain effectively. iii) With a lot of the blackberry

competitors all offering similar packages the industry is very price sensitive with customers

seeking out the best value for money. iv) Low switching costs make it easy for customers to

change the products they normally purchase. v) Demand is highly sensitive to economy, buyers

can delay buying new models until the prices come down favorable to them. As Blackberry do

not have a direct store to sell to their consumers, intermediate stores also have other handsets

readily available for the consumers, which makes it difficult for Blackberry to have a direct impact

on the selling of their handsets. As a result this has created a very price sensitive market because

consumers will always be on the lookout for the best deals. In conclusion, the buyers have a high

amount of power because of the other handsets they can purchase instead of blackberry.

4. 4) Bargaining power of suppliers-moderate There are two main suppliers in this industry: the

hard ware manufacturers and the software developers i) Although blackberry rely on its suppliers

to supply equipment for their advanced mobile phones there are actually a number of large

equipment makers, which blackberry could switch to. ii) As the leading mobile phone company

in the industry they are in a very strong position when bargaining with their suppliers. iii)

Blackberry is in the position where they can bargain and negotiate with any mobile phone

hardware maker because there is a high number of equipment suppliers that are readily available

to them . iv) Blackberry’s main argument would be the fact that they are a global organization

that has the good market share in the industry, so the suppliers would not want to lose such an

illustrious organization. v) Regarding software suppliers there are so many open source mobile

operating system providers, options are plenty and hence the bargaining power of software
provider is low. vi) The other important factor is low bargaining power of supplier is that there is

intense competition among supplier’s acts to reduce prices to producers.

5. 5) Intensity of Existing Rivalry-high Competition is intense among existing companies. Although

there is no much difference in their products, companies try to differentiate their products in

terms of applications and services offered. i) The competitive environment of the Blackberry is

intense due to the launch of new products from already well-known and established brands. For

example Samsung galaxy S4, Nokia Lumia 720. ii) BB competes well with its feature of BlackBerry

messenger, which no other smart phone has. Its other important feature is its QWERTY keypad

because of which it became famous for. iii) The primary competitors of blackberry are smart

phones running on Android and the Apple phone. iv) Despite market share loss, on a global basis,

the number of active BlackBerry users has increased substantially through the years. v)

Competitors like Samsung and nokia have smart phones price starts from as low as 5k where as

blackberry’s initial price starts from 13k so the common people show interest towards them than

blackberry making the competition more intense. vi) When it comes to applications, blackberry

is facing a huge competition majorly from android market where unlimited apps can be

downloaded vii) when the Apple iphone was first released RIM reported that they had 10.5

million BlackBerry subscribers . At the end of 2008, when Google Android was released RIM

subscribers had increased to 21 million. By the end of 2012 its users increased to 80 million In

conclusion, competitive rivalry is very high and Blackberry must be aware of the threat that

competitors have on their business especially with the growing popularity of the Apple iphone

and Samsung galaxy.