Another barrier to entry is switching costs. It is relatively expensive to switch from a Compaq system to an Apple system. When IBM and Apple were the only computer systems to choose from people had to make a choice. When you went to buy one system then you had to buy all the software that

The third force in Porter’s model is the threat of substitute products. Substitute products can be products that companies offer to consumers. These substitutes provide needs to the consumer that are similar to the needs served by the computer industry. The existence of close substitutes presents a strong competitive threat to a company. This in turn limits the price a company can charge for their product and thus profitability is negatively affected. In the case of Compaq, the threat of substitutes is minimal. Since laptops provide efficient means for mobile computing, there is no other true mechanism that possesses a substitute except for possible a palm pilot or a cell phone. However, Compaq also makes a palm pilot.

The second of Porters competitive forces is the bargaining power of suppliers. Suppliers can become severe threats to any company when business depends on them for their products, but the supplier does not depend on the company for business. Suppliers are a threat when they are able to force up the price that a company must pay for its inputs or reduce the quality of the inputs they supply, therefore depressing the companies’ profitability. If suppliers are weak, this gives the company the opportunity to force down prices and demand higher input quality. Compaq relies on a comprehensive Supplier Selection Process to evaluate a vendor's operations. At the minimum, Compaq suppliers must demonstrate ongoing environmental programs. At the close of 1996, all Compaq product and option suppliers were 100% CFC free. Once a potential supplier is identified, a formal survey is initiated which evaluates a company's environmental performance, regulatory compliance, waste minimization, self-assessment programs and environmental policies. As in the Ben and Jerry case, Compaq’s power of suppliers is low, however their insistence on using economically responsible suppliers limits the number available.

To compete with Dell, Compaq n

Some topics in this essay:
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