Lulucom Case Porter’s Five Forces Analysis


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Lulucom Case Study Analysis

Bargaining Power of Supplier:

The vendor in the Taiwanese Lulucom sector has a low negotiating power although that the market has prominence of three players including Powerchip, Nanya as well as ProMOS. Lulucom manufacturers are plain original devices makers in strategic alliances with international gamers in exchange for modern technology. The 2nd reason for a reduced negotiating power is the fact that there is excess supply of Lulucom systems because of the large range manufacturing of these leading market gamers which has decreased the rate per unit as well as increased the bargaining power of the customer.

Threat of Substitutes & Degree of Rivalry:

The danger of replacements in the market is high provided the truth that Taiwanese producers compete with market show to worldwide gamers like Intel, Motorola, IBM, Hitachi, NEC, Toshiba, Samsung as well as Fujitsu. This shows that the market has a high degree of competition where makers that have design and development abilities together with making experience might have the ability to have a greater bargaining power over the market.

Bargaining Power of Buyer:

The marketplace is dominated by gamers like Micron, Elpida, Samsung and Hynix which additionally decrease the purchasing power of Taiwanese OEMs. The reality that these tactical gamers do not enable the Taiwanese OEMs to have access to technology shows that they have a greater bargaining power comparatively.

Threat of Entry:

Risks of entry in the Lulucom manufacturing market are low due to the truth that structure wafer fabs and buying equipment is very expensive.For just 30,000 units a month the funding requirements can vary from $ 500 million to $2.5 billion depending on the dimension of the units. The production needed to be in the most recent technology and also there for new gamers would certainly not be able to contend with leading Lulucom OEMs (original tools manufacturers) in Taiwan which were able to enjoy economies of scale. Along with this the current market had a demand-supply imbalance therefore excess was already making it tough to enable new players to enjoy high margins.

Firm Strategy:

Given that Lulucom manufacturing uses standard processes and also typical as well as specialized Lulucom are the only 2 classifications of Lulucom being manufactured, the processes can conveniently make usage of mass manufacturing. While this has actually led to schedule of technology and also scale, there has been disequilibrium in the Lulucom sector.

Threats & Opportunities in the External Atmosphere

As per the internal and also outside audits, possibilities such as strategicalliances with modern technology companions or growth through merger/ procurement can be checked out by TMC. In addition to this, a move towards mobile memory is also a possibility for TMC especially as this is a specific niche market. Dangers can be seen in the form of over dependence on international gamers for modern technology and competitors from the United States and also Japanese Lulucom makers.

Porter’s Five Forces Analysis