Porters 5 Forces
Suppliers Bargaining Power:
· Very high bargaining power
for suppliers: If a supplier can innovate the industry by selling products no
one else has, they immediately have the power to dictate prices.
· This industry in
particular survives on a scarcity of particular components to manufacture a
high quality projector. Sony Components, for example, are the sole quality
supplier for tubes. Their competitors like Electrohome and NEC are also forced
to purchase parts from them.
· The market itself consists
with a small number of large players. This directly correlates with why the
supplier bargaining power is at a high.
Buyers Bargaining Power:
· Low-medium bargaining
power for buyers: In terms of where to buy components from, buyers are very
· The fact that buyers
themselves depend significantly on suppliers in order to keep up with demand,
puts them in a very difficult position.
· Low threat of substitute:
The market in this particular industry is very unsaturated. Specifically, since
prices are so high for each product, the products are not very well defused
(distributed) within the market.
· The only companies that
can replicate the product are the ones already well indulged into the industry,
and they can only cause little harm to the other industry leaders.
Threat of New entrants:
· The threat of a new
entrants is very low: Due to high startup costs and high economies-of-scale, it
is very difficult for new companies to enter this industry.
· Highly consolidated market:
For the most part, there is not enough space for new competitors, unless they
have the capital to enter.
· Companies within this
industry have already perfected their R&D systems, for a new company to
effectively compete with them, they would require years of rebuilding.
The industry rivalry is extremely high: With each market
leader attempting to use their resources to create a product that can
outperform its competitor, the industry rivalry is very high.
It is assumed that
each market player is actively attempting to innovate and eventually
manufacture a better product using new technology