Final answer:
The computer industry's attractiveness is moderated by the balance between ease of entry for small firms due to technology and the dominance of large firms with significant market share. The power of buyers is increased by global access to a variety of products, requiring companies to focus on price, advertising, and product differentiation. Entry barriers exist but vary in impact due to technological advancements and market conditions.
Step-by-step explanation:
Analysis of the Computer Industry
When analyzing the attractiveness of the computer industry, two critical factors to consider are the threats of new entrants and the power of buyers. The potential for new firms to enter the industry is shaped by information and communication technology advancements, which may reduce costs and barriers, possibly leading to more small firms competing globally. However, this same technology can contribute to 'winner-take-all' markets, where dominant firms like Microsoft and Amazon control a large market share due to economies of scale and global management capabilities.
The power of buyers is significant in the technology sector. With the globalization of markets, buyers have access to a wide range of products, increasing their power and demanding better performance and pricing. This scenario often leads to intense competition among firms that differ through price, advertising, and product differentiation.
Regarding market power, it varies between large incumbents with substantial control and numerous small players fighting for market share. The similarity of products is a double-edged sword, as consumers demand unique features but also seek compatibility and standardization. As for entry barriers, while they may be lowered by technology, significant capital investments and brand recognition can still pose challenges for new entrants.