Porter’s Five Forces Analysis of IBM 

IBM is a research and technology American multinational company. Hermin Hollerith, Charles Ranlett Flint, and George Winthrope Fairchild founded the tech company in 1911. Today, we’ll discuss Porter’s five forces analysis of IBM; bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.

Substitutes and competitors of IBM

• Cognizant
• SAAS
• Google Cloud
• Xerox
• Dell
• Salesforce
• AWS
• HP
• Deloitte
• Cisco
• Google
• SAP
• Wipro

Porter’s five forces analysis of IBM would analyze the bargaining power of suppliers and buyers; the threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management. Here’s IBM Porter’s five forces analysis of research and technology company as follows;

Porter’s Five Forces Analysis of IBM

Let’s discuss Porter’s five forces analysis of IBM as competitive forces in strategic management and they’re as follows;

Bargaining Power of Suppliers in IBM

The bargaining of suppliers is Moderate in the research and technology industry as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in IBM Porter’s five forces analysis of research and technology companies are as follows;

I-Factors Impacting Pricing

The bargaining power of suppliers is dependent on various factors; nature of the product, availability of suppliers, number of available suppliers in the market, quality, and other factors. Some of the main supplies, parts, and services that IBM acquires from suppliers are as follows;

• Intel processors
• Circuit boards
• Software services
• Computer hardware components and parts
• Outsourcing firms

II-Software and Services

IBM is the leading player in the software and service market industry and it has access to the world’s most advanced and sophisticated technology. The uniqueness of other software firms and service providers is very low and it decreases their bargaining power.

III-Hardware

IBM procures computer hardware components, supplies, circuit boards, rams, processors, storage devices, and other parts from various companies. Some of the supplier companies are Intel, Toshiba, Mitsubishi, Lenovo, Fujifilm, and others; they all are world’s renowned brands. They all have a higher bargaining power for their quality parts; other suppliers have a lower bargaining power.

Bargaining Power of Buyers in IBM

The bargaining of Buyers is moderate and Higher in the research and technology company market as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in the IBM five forces analysis of research and technology company are as follows;

I-Large Computer & Software Market

The computer hardware, software, cloud computing, and service market is very large with multiple companies operating their business in the market. While purchasing tech devices and digital services; customers have multiple options of various brands ranging from premium to affordable. They would choose the tech brand that is relevant to their budget.

II-Global Brand Reputation

IBM has a strong legacy and a long history of providing quality services to customers worldwide. In fact, the tech brand has been operating its business in the technology market for the past over one century. A strong brand name and reputation allow the company to attract the attention of customers and gain an edge over competitors.

Threat of New Entrants in IBM

The threat of new entrants is Moderate in the research and technology company market as competitive forces in strategic management. Some of the main factors impacting the threat of new entrants in the IBM five forces analysis of research and technology companies are as follows;

I-High Capital Investment

While entering the software, hardware, or tech service; the new entrance would require heavy capital investment to develop tech products, devices, and digital services. Along with investment, they need a team of computer engineers, programmers, and other experts to solve complicated problems for customers.

II-Brand Loyalty

IBM has established a very loyal database of customers by providing tech services for the past century. It offers a unique competitive edge to the tech giant company. On the other hand, new brands don’t have a loyal database of customers and they still need to earn the trust and confidence of customers.

Threat of Substitutes to IBM

The threat of substitute products and brands is higher to lower in the research and technology company market as competitive forces in strategic management. Some of the main factors impacting the threat of new substitutes in the IBM five forces analysis of research and technology company are as follows;

I-Hardware

There are multiple hardware and tech device manufacturing companies operating their business and offering hardware devices at multiple price ranges. Customers could easily switch from one brand to another without incurring any cost. It shows that IBM has lower bargaining power in the hardware segment.

II-Sofware

IBM’s bargaining power is Moderate in the software segment. It is because the software industry is competitive with multiple software firms. In some areas, IBM has a technological edge and the company could dictate the price, but not all.

III-Service

The bargaining power of IBM in the service sector is high; because the service-providing market is highly competitive. There are many online service-providing firms in developing countries, and they are willing to resolve the problem at a lower cost.

Competitive Rivalry in IBM

The competitive rivalry among research and technology companies is very high as competitive forces in strategic management. Some of the main factors impacting competitive rivalry in IBM’s five forces analysis of research and technology company are as follows;

I-Tough Competition

The computer hardware, software, and service market has become highly competitive over the years with multinational brands operating business in the global market. IBM has to face tough competition from Microsoft, Amazon, Google, SAP, Oracle, and other brands. They earned a significant market share in the tech industry along with a loyal database of customers.

II-Research & Development

The tech industry is rapidly changing with the latest technological developments and innovations. Tech giant brands invest billions of dollars in research and development to introduce innovative tech products, services, and features to gain a competitive edge in the customer market.

Conclusion: IBM Porter’s Five Forces Analysis |5 Forces Analysis of IBM

After an in-depth study of Porter’s five forces analysis of IBM; we have realized that IBM is the world’s leading technology and research brand. If you are learning about the IBM 5 forces analysis of research and technology company; then you should keep in mind the abovementioned bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.