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Freeport Indonesia Case Porter’s Five Forces Analysis

CASE SOLUTION

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Freeport Indonesia Case Study Analysis

Bargaining Power of Supplier:

The distributor in the Taiwanese Freeport Indonesia market has a reduced negotiating power despite the fact that the market has dominance of 3 gamers consisting of Powerchip, Nanya as well as ProMOS. Freeport Indonesia suppliers are simple initial devices suppliers in calculated alliances with foreign gamers for innovation. The second factor for a low negotiating power is the fact that there is excess supply of Freeport Indonesia systems due to the huge scale production of these dominant sector gamers which has reduced the cost each as well as increased the bargaining power of the buyer.

Threat of Substitutes & Degree of Rivalry:

The threat of replacements in the marketplace is high offered the fact that Taiwanese manufacturers compete with market share with worldwide gamers like Intel, Motorola, IBM, Hitachi, NEC, Toshiba, Samsung and also Fujitsu. This suggests that the marketplace has a high degree of competition where manufacturers that have style as well as growth abilities along with making experience 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 and Hynix which even more decrease the purchasing power of Taiwanese OEMs. The fact that these strategic gamers do not permit the Taiwanese OEMs to have accessibility to technology suggests that they have a higher negotiating power relatively.

Threat of Entry:

Hazards of access in the Freeport Indonesia manufacturing industry are reduced due to the fact that building wafer fabs as well as buying devices is highly expensive.For just 30,000 devices a month the resources needs can range from $ 500 million to $2.5 billion relying on the dimension of the units. The manufacturing required to be in the most current innovation and also there for new gamers would not be able to compete with leading Freeport Indonesia OEMs (original tools makers) in Taiwan which were able to enjoy economic climates of range. Along with this the current market had a demand-supply imbalance and so excess was already making it tough to permit brand-new players to take pleasure in high margins.

Firm Strategy:

Because Freeport Indonesia production uses basic procedures and also common and also specialized Freeport Indonesia are the only 2 groups of Freeport Indonesia being produced, the processes can easily make use of mass manufacturing. While this has led to availability of technology and range, there has been disequilibrium in the Freeport Indonesia sector.

Threats & Opportunities in the External Setting

As per the internal and also exterior audits, opportunities such as strategicalliances with innovation companions or growth via merger/ purchase can be checked out by TMC. Along with this, an action towards mobile memory is also an opportunity for TMC especially as this is a niche market. Threats can be seen in the form of over dependancy on international gamers for technology and also competitors from the US and Japanese Freeport Indonesia makers.

Porter’s Five Forces Analysis