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Intel five forces analysis

Introduction :-

Intel is  a leading technology brand with a  large customer base and a diversified business. The company is known as a maker of computer chips. However, in the recent years, Intel has changed its business model to transition from being a PC centric business to a data centric business. This transition which began five years ago has proved successful. The company’s revenue and profits have started growing. Intel also devotes a large sum into research and development in order to remain competitive and ahead of its competitors. The company sources from a large number of suppliers from around the world. Read a five forces analysis of Intel to understand its competitive position in the industry.

Bargaining power of suppliers: moderately low

The bargaining power of Intel suppliers is moderately low because of several factors. First of all, in most cases, there are several suppliers that can offer the same raw material. Moreover, Intel is a large brand with enormous financial strength and that gives it the upper hand against the suppliers. In some cases , the number of suppliers for a component or product may be limited. However, still due to the purchasing power of Intel, the bargaining strength of suppliers remains low.

Bargaining power of customers: moderately high

The bargaining power of customers in this era has grown a lot. Apart from being highly informed, the customers also have many options before them. These factors have driven the bargaining power of customers higher. Moreover, the level of competition in the industry has grown which has also become a reason behind growing bargaining strength of customers. Brands have to invest more in marketing as well as  research and development to respond to the changing customer demand patterns. In this way, the bargaining strength of customers has grown high. Some factors that moderate the bargaining power of customers include brand recognition, marketing and customer service.

Threat of substitutes: moderate

The threat of substitutes for Intel is moderate. It is because while there are some more brands with a matching product portfolio, overall its capabilities are matchless. Moreover, it is a leading producer of semiconductors. Apart from that, several of its competitors rely on third party foundries for assembly and testing of their products and components. The threat of substitutes also gets moderated by Intel’s heavy focus on research and development as well as quality.

Rivalry among existing players: High

The technology industry is marked by heavy competition and the level of rivalry among Intel and its competitors is very high. Some of the direct competitors of Intel include Samsung, Advanced Micro Devices and INVIDIA. Each of the brands invests heavily in research and development to find growth and to expand market share. As Intel has transitioned from a PC centric business model to a data centric business model, the number of rivals and level of rivalry has also grown.

Threat of new entrants: Low

The threat of new entrants in this industry is low because of several factors. First of all there is a large investment involved and not every brand can afford to enter a complex and risky industry even if it is willing to risk a large sum. Moreover, the incumbent players are quite aggressive in terms of competition and invest heavily in research and development as well as customer acquisition. Brand recognition, customer service and other factors also make it difficult for new players to enter.

  • Sources:
  • Intel Annual Report 2018