The Barriers of Entry to Compete with Apple

With Chapter 2 being about environmental threats my mind when straight to Michael Porter's Five forces model. I had to use this for several assignments getting my undergrad so I was excited to talk about it once more. I am going to use Apple as an example again today because partly I love Apple and also I am using a mac so I thought why not. I am going to just talk about the barriers of entry and their threat levels because the whole model would be too long.

Economies of Scale is the first barrier of entry into industries. The tech consumer industry is such a big worldwide industry that it makes it very difficult, almost impossible to enter. Also if a company wanted to enter the technology industry they would have to come up with millions of dollars just to compete competitively with the top performers.

Product Differentiation in the tech consumer industry is probably the greatest barrier of entry. Most people are very loyal to a company and its products so the cost of getting that many loyal customers in this particular industry is very high. Not only would it cost a great deal of money but it would also require a lot of time to accumulate this.

Switching costs is the cost for a customer to switch between products, and in this industry it is not a significant entry barrier. There are some costs associated with switching but this barrier does not have as great of an impact on entering this industry as others do.

Access to distribution channels or the amount of money spent on logistics, is very high when talking about the tech consumer industry. For example Apple ships millions of products every month. Access to these channels are actually easy to get into because anyone can use FedEx or UPS to ship their goods. Where it becomes pricey and harder to penetrate is shipping from the factory over seas to other countries around the world. Making this barrier of entry moderate when talking about significance.

Government Policy is yet another barrier. When talking about the government and the tech consumer industry, there are a lot of laws. But when talking about barriers to entry this will not make it any harder to keep out new entrants.

Capital Requirements is that last barrier and is very important. As one of the most profitable and costly industries on the market, the amount of money required to compete in this industry is so high that the possibility of new entrants is diminished. Making this barrier very prevalent.

In conclusion when considering all the different barriers of entry in the technology industry, the threat is Low because of how much product differentiation and capital requirements affects entry. Also most of the other threats are also affecting the possibility of entry in some way.