Lulucom Case Porter’s Five Forces Analysis


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Bargaining Power of Supplier:

The supplier in the Taiwanese Lulucom market has a reduced negotiating power despite the fact that the market has prominence of three gamers including Powerchip, Nanya and ProMOS. Lulucom manufacturers are simple initial devices producers in strategic alliances with foreign players in exchange for technology. The 2nd reason for a reduced negotiating power is the fact that there is excess supply of Lulucom devices because of the large range production of these leading market gamers which has decreased the rate each as well as increased the negotiating power of the customer.

Threat of Substitutes & Degree of Rivalry:

The danger of replacements on the market is high offered the truth that Taiwanese makers take on market share with global players like Intel, Motorola, IBM, Hitachi, NEC, Toshiba, Samsung and also Fujitsu. This suggests that the marketplace has a high degree of rivalry where suppliers that have design as well as development capacities in addition to manufacturing knowledge may have the ability to have a higher negotiating power over the market.

Bargaining Power of Buyer:

The market is controlled by players like Micron, Elpida, Samsung and Hynix which additionally lower the purchasing power of Taiwanese OEMs. The truth that these strategic gamers do not permit the Taiwanese OEMs to have accessibility to modern technology indicates that they have a greater negotiating power somewhat.

Threat of Entry:

Risks of entrance in the Lulucom production sector are reduced owing to the fact that building wafer fabs and acquiring tools is highly expensive.For simply 30,000 systems a month the resources needs can range from $ 500 million to $2.5 billion relying on the dimension of the units. In addition to this, the manufacturing needed to be in the most recent technology and there for new players would not be able to compete with leading Lulucom OEMs (original equipment makers) in Taiwan which were able to enjoy economic situations of range. The present market had a demand-supply inequality and also so surplus was currently making it challenging to enable new players to delight in high margins.

Firm Strategy:

Because Lulucom manufacturing makes use of basic procedures and typical as well as specialty Lulucom are the only two groups of Lulucom being produced, the processes can easily make use of mass manufacturing. While this has actually led to accessibility of technology and also range, there has actually been disequilibrium in the Lulucom industry.

Threats & Opportunities in the External Environment

As per the internal as well as outside audits, opportunities such as strategicalliances with modern technology partners or growth via merging/ purchase can be discovered by TMC. Along with this, a relocation towards mobile memory is also a possibility for TMC specifically as this is a specific niche market. Threats can be seen in the type of over dependence on foreign gamers for modern technology as well as competitors from the United States and also Japanese Lulucom manufacturers.

Porter’s Five Forces Analysis