Bargaining powers of suppliers
Before Napster’s entry, the bargaining power of the suppliers was sufficiently low because a large number of suppliers were available, and the consumers wanted their music as soon as possible, regardless of the price they had to pay for it.
Bargaining power of consumers
Consumers had little or no bargaining power before Napster’s entry because only a few key music producers and distributors in the music industry were leading the music distribution.
The threat of new entrants
Before Napster, the threat of new entrants was moderate because the music distributors had established themselves in the industry. Still, consumers had become habitual of purchasing their music from whichever source they could get good quality from at a reasonable price.
The threat of substitute products
The threat of substitute products was relatively moderate since consumers had a reasonable degree of interest in switching between products and would only do so if the track they wanted was unavailable at one of their regular sources.
Competition within the industry
Competition within the music industry was significantly high because the demand for music was continuously increasing, and consumers wanted tracks as soon as they could get them and from whichever source they could acquire them.
Porter’s Five Forces model after Napster’s entry
Bargaining powers of suppliers
After Napster’s entry, suppliers lost almost all their bargaining power because consumers could acquire any track they required at exceptionally nominal rates.
Bargaining power of consumers
Consumer’s experienced a phenomenal increase in bargaining power after Napster’s entry.
The threat of new entrants
The threat of new entrants increased significantly because market leaders began to undergo significant losses because of the presence of Napster as a music distributor.
The threat of substitute products
The threat of substitute products also increased since Napster allowed consumers to opt for alternate music sources if they were unsuccessful in providing them with the track they wanted.
Competition within the industry
There was hardly any competition left in the industry since consumers chose to download their music from sources that provided little or no revenue to the music industry.
The PEST and Porter’s Five Forces
Porter’s five forces is an analytical approach meant for strategy establishment at the industry level. In Porter’s five forces, the examination performed is confined within the perimeters of the industry. In contrast, the political, economic, socio-cultural, and technological analysis is carried out to analyze the macro environment of the subject company. While the study of Porter’s five forces provides an overview of the internal aspects of the industry, the PEST analysis provides an overview of the external factors that are primary in market research.
Napster’s strategy in the music industry
Napster’s strategy in the music industry was very straightforward and very subtle. Napster initially began by providing consumers with a free-of-charge service that allowed them to download any music track they wanted. However, Napster’s strategy changed as time went by, and Napster began to set up memberships for its consumers. Having already acquired countless users across the globe, it was not difficult for Napster to convert freebee consumers into memberships. The recording industry also gave a portion of the revenues made from the membership fee.
Apple’s strategy in the music industry
Apple has always chosen to combine two fundamental elements attributed to its success in the music industry. The first is that of technological advantage. Apple’s iPod was the music player with the highest capacity in the market when it came out. The second was the creation of the iPod lounge website, which allowed iPod consumers to interact with each other and Apple. These elements came together to give consumers an experience of music they had never had before. As a result, Apple has managed to do precisely what it wanted. By combining these two elements, Apple produced a music player that allowed Apple to make a significant earning off every iPod unit sold and allowed consumers to save and listen to more songs than they ever could before.
We are setting the strategy in the music player industry.
To be successful in the current music player industry, there are several strategic options at hand, but before any of them can be implemented, let alone considered, it is imperative to comprehend that almost all of them are based on the technological capability of the entrant. Also, any strategy would be incomplete without forming a coalition or association with the current market giants of the music player industry. Consumers in this industry need to be provided with reliable and user-friendly technology to adjust to new music players. Any music player too similar to an old one may be too similar to switch to, and any music player too different may be too complex for consumers to learn.
Also, parties such as songwriters, recording companies, song publishers, recording artists, and retailers may be relatively easy to remunerate since they have negotiable terms and are almost always willing to gain access to the public through a new channel. However, online distributors and distribution licensing companies can be pursued through coalitions, acquisitions, or mergers.
Threats and opportunities for Apple
Threats to Apple
One of the most fundamental threats to Apple is the cutthroat degree of competition in the music technology market. Technologies such as those used in the Apple iPod are on the verge of being replaced by advancements in wireless technology. Because of Apple’s high success rate, almost every technological advance Apple has introduced is subjected to extensive competition. Apple also needs to keep economic conditions in light to ensure significant sales volumes for the Apple iPod and the Apple Mac.
In this regard, Apple needs to give a significant degree of consideration to the variables that provide Apple with a competitive edge in terms of its technology.
Opportunities for Apple
Apple has still not introduced its iTunes capabilities in mobile phone accessible levels. The one attempt by Motorola was the Rokr mobile phone which failed to deliver the required standards of cell phone-based iTunes incorporation, and Apple has the margin it needs to bring forth the perfect combination of cell phone and iTunes player needs. Downloads via Universal Serial Bus cables allow users to download music instantly, and this can serve to open new horizons for Apple in the coming future (Mark).
Works Cited
Mark, Ken. “Apple Inc.: iPods and iTunes.” Ivey Management Services (2007): 1-15.