Five Forces of Competition Impact On Samsung

Threat of new entrants

            This does not create a significant impacts to the company since Samsung Corporation benefits from economies of scales, which is to some extend a cost benefit to the company. The new entrants to the market are deterred by these cost benefit which lacking to them. in addition, venturing and running in consumer electronics and mobile phone industry needs a massive capital investment, which is a significant barrier for new entrants(Samsung Electronics, 2015). Further analysis indicated that new entrants faces challenges of accessing distribution channels such as consumer technology selling outlets, distribution centers and wholesales warehouse in the high street, thus making it very difficult for new entrants to mount fierce competition to already established firms like Samsung.

Bargaining power of buyers

This play a significant impact on the competitiveness of the Samsung products in the market since the customers can easily switch to LG, HTC, Blackberry, Motorola, Nokia or Apple products without incurring any costs, thus making the bargaining power of the buyer very important(Brostoff, et al., 2015). Another important aspects about bargaining power of buyers is the price sensitivity and comprehension of the information circulated about the functionalities and features of the products. These factors influences the bargaining power of the buyers and creates fierce competition in the market.

Bargaining power of suppliers

            This factor depends with specific suppliers working with the Samsung company since there are numerous suppliers. For example, suppliers that supply the company with general components and parts do not amount great bargaining power since Samsung has the ability to negotiate for price depending with volume of the materials ordered. However, suppliers such as Google who supply platform such as Android platform mounts great bargaining power since there is no alternative suppliers to supply such products(Daft, 2014). For many years, Samsung has fully acknowledged the importance of establishing good strategic cooperation with the suppliers and as a result, the company shared 72.7 % of the total economic value with suppliers in the year 2014. Furthermore, Samsung Company continues to actively engage with the suppliers about various initiatives and programs such as informal meeting, Hot Line, Suppliers Dialogue Fair and Shared Growth Day.

The intensity of rivalry of competitors

            The rivalry of competitor is very intense in the information technology, mobile phone and electronic industry. Specifically, Samsung faces fierce competition from Apple, Sony, Blackberry, LG, HTC and Nokia. As a result, any product put into the market by Samsung is countered by these companies by also producing products that match that of their competitor(Porter, 1979). For example, when Samsung introduced Smart-watch, Apple also produced the similar product with more functionalities. However, Samsung managed to ship more than 5 million Smart-watch products in the year 2014.

The threat of a substitute products

            This force is very insignificant because it is difficult for substitute products to mount fierce competition to the existing products which already have control over large market segment. For example, it is unrealistic to imagine a new substitute product that will replace smartphones in the market.

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