Research Paper on "Industry Analysis on the Personal Computer Industry the Supply Conditions"

Research Paper 6 pages (1731 words) Sources: 6

[EXCERPT] . . . .

Industry Analysis on the Personal Computer Industry

Personal Computer Industry

Industry Analysis on the Personal Computer Industry: Supply Conditions

Supply is one of the essential factors in the maximization of profits and revenues within relevant entities. In this section of the research paper, the focus will be on how Hewlett-Packard, Dell, and Lenovo supply personal computers to their consumers. This is through examination of the value chain, methods of product differentiation, influence of supply side on the structure of the industry, analysis of the industry through Porter's five forces, and supply determinants. It will also focus on the identification and illustration of the supply chain characteristics with the aim of providing an accurate illustration of the supple side of the three multinational organizations.

Industry Analysis on the Personal Computer Industry: Supply Conditions

How the three big PC makers (Hewlett-Packard, Dell, and Lenovo), supply PC to their customers

Hewlett-Packard, Dell, and Lenovo are multinational information technology corporations aiming to exercise the freedom and opportunities in relation to globalization. These organizations implements various supply tactics with the aim of reaching various consumers across the globe. The aim of these organizations is to enhance their volume of revenues and financial resources for every financial year. Supply is one of the essential factors in the promotion of the organizations' commodities and services across the globe. It is also essential to note that supply enhances quality and professional interaction between the consumers and relevant industries.

The value chain (upstream and downstream segments)

The value chain (upstream & downstream segments) refers to the steps and stages by business entities from acquisition of the raw materials to the eventual end-user. The main aim of the value chain is to provide maximum value to the consumers at the least possible cost of production and distribution. This is an indication of the adoption of quality value chain with the aim of maximizing the opportunities and financial resources while minimizing the cost of attaining the goals and objectives of the organization.

Within the global computer industry, there is a common value chain for the provision of quality and valuable products to the consumers at minimal costs. Hewlett-Packard, Dell, and Lenovo adopt and implement similar value chain with the aim of providing valuable products to the consumers and fight stiff competition within the industry (Hongni, 2010).

Figure A: Value Chain (Derrick, 2005)

In the supplying of their products and services to the consumers, Hewlett-Packard, Dell, and Lenovo use both direct and indirect approaches to the end-users. This relates to provision of the products directly to the consumers through personal computer vendors or retailers within the market. The first process of the value chain focuses on the integration or implementation of research and development to address preference issues of the consumers within the personal computer industry. This will enable each organization to focus on the achievement of competitive advantage through implementation of research and development to enhance the quality and value of the products.

Design and assembly processes are essential components of differentiations within the personal computer industries. The organization focuses on the importation of factors of production such as motherboards. In other cases, the three companies manufacture their own products thus incorporation of the two processes to minimize the cost of production. Quality of the products within this industry is essential in the determination of the pricing mechanisms. This is because consumers in the industry focus on the quality rather than the price thus quality-sensitive target audiences.

What are the major methods of product differentiation among the three PC Makers?

Hewlett-Packard, Dell, and Lenovo adopt and integrate different methods of differentiations with the aim of fighting the stiff competition within the industry. Dell focuses on the integration of effective website enhance interaction with the consumers. Dell also persists or focuses on the consumers as the main aspects of production. This enables the organization to provide quality products aiming to meet the preferences and needs of the consumers. Another differentiating factor for the Dell Company is quality labor and workforce to facilitate achievement of the goals and objectives of the consumers (Dell, 2012). Lenovo focuses on the building and implementation of technology as a differentiating factor. This indicates that the organization implements invention and innovation as factors of differentiations to meet the demands of the stiff competition. Other differentiation aspects include quality customer care, focusing on the consumers, and interactive websites for effective and efficient interaction with the consumers (Lenovo, 2012). Hewlett-Packard adopts and implements quality customer care, technology or inventions, interactive websites, and research and development to enhance the achievement of the goals and objectives within the industry. These differentiation methods are essential in aiding the performance of the three entities within the personal computer industry thus the opportunity to face and cope with the stiff competition (Data Monitor, 2011).

How the supply side influences the structure of the industry

Supply has a great influence in the structure of the industry in relation to the provision of personal computers to the relevant consumers. The main aim of supply is to offer quality products at the least possible cost. Supply cost will determine the value chain thus determination of the distribution and manufacturing channels within the industry. This indicates that supply side will determine the structure of the industry through determination of the interactions between the consumers and the products providers. Supply side will determine adoption of direct or indirect interaction between the consumers and organizations. This is essential in the development of the structure of the industry in relation to the provision of personal computers to the consumers and various retailing entities. Supply side will also influence the demand and cost of the products thus affecting equilibrium within the personal computer industry. This is vital for the assessment of the structure of the industry.

Use Porter's five forces as a guide to talk about the supply side of the industry

The power of suppliers (Porter, 2008) within the personal computer industry is quite high. One of the essential reasons for this encounter is the presence of few substitutes to the components in the development or manufacturing of the personal computers. These components include microprocessors and operating systems, which are vital for the personal computer industry. It is also essential to note that there is the essence of high switching cost in case an organization wishes to move from one supplier to another. This is because of the aspects of software and hardware incompatibilities thus the essence of high supplier power within this industry. For instance, it would be expensive for an organization to move from Lenovo to Dell because of the incompatibilities of the software and hardware. Suppliers maximize this power in order to increase their financial resources while minimizing their cost of operations and distributions within the financial year.

There is also a high buyers' power within the personal computer industry. Despite the fact that individual consumers lack the bargaining power in the procurement of the products from the three entities, larger consumers or entities have significant purchasing power. This is because of the ability of the entities to procure products in larger quantities in comparison to the individual consumers. This is essential in leveraging purchasing power to obtain discounts or reduced prices for the products. It is also cheaper to switch to other suppliers by the consumers thus making the buyers' power to be quite high within the industry. Consumers also have the opportunity to purchase components of the computers to assemble on their own with the aim of reducing the cost of production. This is a threat to the entire industry thus negative impacts on the three companies focusing on the provision of quality products to the consumers. It is also essential to note the essence of stiff competition within the industry. Exit and entry barriers are also high due to the cost of starting an entity to fight the stiff competition within the industry.

What are the supply determinants?

There are four critical supply determinants in the personal computer industry. One of the essential determinant of supply is technological or innovation advancements. Technology is essential in the minimization of cost of production. This is through increasing the rate or volume of production thus achievement of competitive advantage. Technology is also essential in enhancing interaction and distribution of products to the consumers. It is essential for the organizations to implement this factor in order to enhance its supply conditions and aspects. Another supply determinant is subsidy or tax. This factor affects the volume of financial resources at the end of the financial year. The main objective of any business entity is to maximize the level of profits while minimizing the cost of production and distribution. Implementation of taxation will increase the level of expenses in production and distribution of products. Subsidy will reduce the cost of production thus transfer of real discount to the consumers. Resource supplies are also essential determinants in supply in case producers acquire inputs from other entities. Another determinant of supply is the level… READ MORE

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