Corporate Financial Analysis - Group Assignment Part 1: Porter's 5 Forces

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This document incorporates the content of CFA's 2016 Group Assignment Part 1. In this assignment you discuss Porter's 5 forces in regards to the technology industry. In contains: Executive summary, Rivalry among existing competitors, Bargaining power of supplier, Bargaining Power of Buyers, threat of new entrants, threat of substitution and conclusion. INTRODUCTION Technology is recognised as the key driver of the economy and the rate of change driven by technology is enormous to the global economy (Sallomi, 2016). It has expanded from being the backup of major business operation and transition across many industries, to be the core of the digital economy (Sallomi, 2016). The global Internet service, data processing and webs services and data storage services are expected to be subsectors in the technology industry bearing significant investment opportunity (Sallomi, 2016). Moreover, the demand for smart phones and tablets has been growing and the market is expected to surpass the 2 billion milestones in 2016 (Business Insider Australia 2015). According to the global technology IPO review in Graph 1, US$769 million of tech IPO’s were launched in the first quarter of 2016 (US$6063, 2015 Q1) (PWC 2016). The decrease of IPO’s in 2016 results from the global economic conditions, such as low oil prices, low US interest rates and downward pressure on the Chinese economy (PWC 2016). However, the market is expected to perform better later this year because of the availability of private funding to invest in tech IPO (PWC 2016). Therefore, the profitability of the digital technology in particular under the current economic condition is one of the major concerns for investors.

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