Application of Porter 5 Forces to IBM

Essay by chneohUniversity, Bachelor'sA, June 2009

download word file, 3 pages 5.0

Bargaining Power of SupplierGenerally, the telecommunications industry in Malaysia is dependent on imports for the majority of its network components as most of the network equipment cannot be sourced locally. Maxis' networks utilise standard equipment which is available from a limited number of suppliers. Most of the GSM equipment for Maxis' mobile network operations is purchased from Motorola, Siemens and Trisilco Folec, and Maxis maintains close working relationships with its key network equipment suppliers.

Maxis has been purchasing from these suppliers for approximately six years. Maxis also purchases certain network components from various other key suppliers, including Nortel and Cisco. Maxis has been dealing with substantially the same group of suppliers since commencement of operations in 1995. Bad news was, Siemens is now a sub-contractor to Motorola for network switching systems. Maxis left only one main supplier- Trilsilco Folec. The bargaining power of their supplier becomes strong. Moreover, their supplier is from overseas.

In future, Maxis believes that comparable equipment and support is available from other established suppliers.

Bargaining Power of BuyerInformation technology increase the bargaining power of buyer, high available of information make it easier for buyer to evaluate sources of materials about telecommunication. There are many alternatives product such as fax, email, and internet which enhance the bargaining power of buyer to the mobile service provider. Meanwhile, high level of competition between the major telecommunication companies that exists in current market leads to low switching cos for the buyer to change their mobile service provider. Customers are high price sensitivity, easy to switch brand.

Threat of SubstitutesThere are many substitutes for mobile services such as a very traditional way- letter, fixed home line telephone, fax, and email. From the year of 2000 onwards, broadband Internet services, which enable faster and always-on connection to the worldwide web,