Blue River Capital Case Porter’s Five Forces Analysis


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Bargaining Power of Supplier:

The distributor in the Taiwanese Blue River Capital industry has a reduced negotiating power despite the fact that the industry has dominance of 3 players including Powerchip, Nanya and ProMOS. Blue River Capital makers are simple initial tools suppliers in tactical alliances with international players in exchange for technology. The second factor for a low negotiating power is the fact that there is excess supply of Blue River Capital units because of the big scale production of these leading industry players which has decreased the rate per unit and also enhanced the bargaining power of the customer.

Threat of Substitutes & Degree of Rivalry:

The hazard of alternatives in the marketplace is high provided the reality that Taiwanese suppliers take on market share with global players like Intel, Motorola, IBM, Hitachi, NEC, Toshiba, Samsung and also Fujitsu. This shows that the marketplace has a high degree of competition where makers that have layout and also growth capabilities together with producing knowledge may have the ability to have a higher bargaining power over the market.

Bargaining Power of Buyer:

The market is dominated by players like Micron, Elpida, Samsung and also Hynix which additionally lower the buying powers of Taiwanese OEMs. The reality that these strategic gamers do not allow the Taiwanese OEMs to have access to technology shows that they have a higher bargaining power somewhat.

Threat of Entry:

Hazards of access in the Blue River Capital manufacturing market are reduced due to the truth that building wafer fabs as well as purchasing equipment is highly expensive.For simply 30,000 units a month the resources needs can vary from $ 500 million to $2.5 billion depending on the size of the units. The manufacturing required to be in the most current modern technology and there for brand-new gamers would not be able to compete with dominant Blue River Capital OEMs (initial tools makers) in Taiwan which were able to take pleasure in economic situations of scale. The existing market had a demand-supply imbalance as well as so oversupply was currently making it difficult to allow brand-new players to take pleasure in high margins.

Firm Strategy:

The area's manufacturing firms have actually counted on a technique of mass production in order to reduce prices via economies of range. Given that Blue River Capital manufacturing utilizes typical processes as well as conventional and specialized Blue River Capital are the only 2 categories of Blue River Capital being made, the processes can quickly utilize mass production. The sector has leading manufacturers that have actually created partnerships for modern technology from Korean and Japanese companies. While this has actually led to accessibility of technology as well as range, there has been disequilibrium in the Blue River Capital industry.

Threats & Opportunities in the External Environment

As per the inner and exterior audits, opportunities such as strategicalliances with technology partners or growth through merger/ procurement can be explored by TMC. An action towards mobile memory is additionally a possibility for TMC particularly as this is a particular niche market. Risks can be seen in the form of over dependancy on international players for modern technology as well as competition from the US and also Japanese Blue River Capital manufacturers.

Porter’s Five Forces Analysis