Chestnut Foods Case Porter’s Five Forces Analysis


Home >> Harvard >> Chestnut Foods >> Porters Analysis

Chestnut Foods Case Study Solution

Bargaining Power of Supplier:

The vendor in the Taiwanese Chestnut Foods sector has a reduced negotiating power despite the fact that the sector has dominance of 3 gamers including Powerchip, Nanya and ProMOS. Chestnut Foods producers are mere initial equipment manufacturers in calculated partnerships with foreign players in exchange for modern technology. The second reason for a low negotiating power is the reality that there is excess supply of Chestnut Foods devices as a result of the large range manufacturing of these dominant sector players which has lowered the rate per unit and also boosted the negotiating power of the customer.

Threat of Substitutes & Degree of Rivalry:

The danger of substitutes in the market is high provided the truth that Taiwanese makers take on market show to international players like Intel, Motorola, IBM, Hitachi, NEC, Toshiba, Samsung and Fujitsu. This indicates that the market has a high level of competition where producers that have style as well as growth capacities together with producing know-how might be able to have a higher bargaining power over the marketplace.

Bargaining Power of Buyer:

The marketplace is dominated by gamers like Micron, Elpida, Samsung as well as Hynix which better reduce the buying powers of Taiwanese OEMs. The truth that these strategic gamers do not allow the Taiwanese OEMs to have access to innovation indicates that they have a higher bargaining power comparatively.

Threat of Entry:

Dangers of access in the Chestnut Foods manufacturing sector are low owing to the fact that structure wafer fabs and acquiring tools is extremely expensive.For just 30,000 devices a month the resources needs can vary from $ 500 million to $2.5 billion depending on the size of the systems. The production needed to be in the latest innovation as well as there for brand-new gamers would not be able to compete with dominant Chestnut Foods OEMs (original tools manufacturers) in Taiwan which were able to enjoy economic situations of scale. Along with this the current market had a demand-supply inequality therefore surplus was currently making it challenging to enable brand-new players to take pleasure in high margins.

Firm Strategy:

The area's production firms have actually relied upon an approach of mass production in order to decrease expenses through economic climates of range. Because Chestnut Foods production uses typical procedures and conventional and specialized Chestnut Foods are the only two classifications of Chestnut Foods being made, the procedures can conveniently make use of automation. The market has dominant suppliers that have created partnerships for innovation from Oriental and Japanese companies. While this has actually resulted in accessibility of innovation and also scale, there has been disequilibrium in the Chestnut Foods market.

Threats & Opportunities in the External Atmosphere

Based on the internal as well as outside audits, opportunities such as strategicalliances with innovation companions or growth via merger/ procurement can be checked out by TMC. A move towards mobile memory is also an opportunity for TMC particularly as this is a niche market. Risks can be seen in the type of over dependence on international players for technology and competition from the United States as well as Japanese Chestnut Foods manufacturers.

Porter’s Five Forces Analysis