Presentation

Question 1

Threat of new Entrants

Answer 1

High barriers to entry- Created due to the high amount of capital and advanced R&D capabilities required

Economies of scale- NVIDIA benefits from a massive scale allowing them to capitalize on economies of scale and save on production costs

Patents and intellectual property - NVIDIA’s proprietary technologies create significant barriers to entry

Question 2

Threat of powerful Suppliers

Answer 2

Reliance on specialized suppliers: NVIDIA depends on suppliers like TSMC for advanced semiconductor manufacturing (The Globe and Mail, 2024)

Switching Costs: Changing suppliers while manufacturing something this complex would be timely and expensive

Raw Material constraints: Rare materials required to manufacture can increase the power suppliers have

Question 3

Threat of Powerful Buyers

Answer 3

Broad Consumer Base: NVIDIA sells to diverse markets, reducing bargaining power of buyers
Differentiated Products: The cutting edge technology provided by NVIDIA makes it difficult for buyers to find alternatives

Question 4

Threat of Substitution

Answer 4

Alternative Competitors: Companies such as Intel offer competitive solutions within the market

Technological Innovations: Emerging technologies such as AI impose a threat of substitution

Switching Costs: NVIDIA’s “CUDA” ecosystem (Gupta, 2020) increases switching costs - If you want to change one you have to change them all

Question 5

Threat of Rivalry

Answer 5

Major Competitors: AMD and Intel are major and aggressive competitors in the market

Faced Paced Innovation: The industry demands constant innovation, leading to high R&D spending and frequent product releases.

Market Share Battles: Competitors regularly engage in price wars and performance comparisons, especially in gaming and professional GPUs.