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Prime Micro Inc Case Porter’s Five Forces Analysis

CASE STUDY

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Prime Micro Inc Case Study Solution

Bargaining Power of Supplier:

The distributor in the Taiwanese Prime Micro Inc market has a reduced negotiating power despite the fact that the industry has supremacy of three players including Powerchip, Nanya as well as ProMOS. Prime Micro Inc producers are simple original devices manufacturers in tactical alliances with foreign gamers for modern technology. The second factor for a reduced negotiating power is the truth that there is excess supply of Prime Micro Inc units as a result of the huge scale production of these leading industry players which has decreased the rate per unit and also boosted the negotiating power of the buyer.

Threat of Substitutes & Degree of Rivalry:

The risk of substitutes in the marketplace is high offered the fact that Taiwanese producers compete with market share with international players like Intel, Motorola, IBM, Hitachi, NEC, Toshiba, Samsung and also Fujitsu. This indicates that the marketplace has a high level of competition where makers that have style and development abilities together with producing proficiency may have the ability to have a greater negotiating power over the market.

Bargaining Power of Buyer:

The marketplace is controlled by gamers like Micron, Elpida, Samsung and also Hynix which better lower the purchasing power of Taiwanese OEMs. The fact that these critical gamers do not permit the Taiwanese OEMs to have accessibility to innovation indicates that they have a higher negotiating power fairly.

Threat of Entry:

Threats of entry in the Prime Micro Inc manufacturing market are low because of the truth that structure wafer fabs and acquiring tools is extremely expensive.For just 30,000 systems a month the funding demands can range from $ 500 million to $2.5 billion depending on the dimension of the devices. In addition to this, the manufacturing required to be in the most up to date technology as well as there for new players would not have the ability to take on dominant Prime Micro Inc OEMs (original devices producers) in Taiwan which had the ability to appreciate economies of scale. In addition to this the present market had a demand-supply discrepancy therefore excess was currently making it tough to permit new gamers to delight in high margins.

Firm Strategy:

The area's production companies have relied on a technique of automation in order to lower costs with economies of scale. Considering that Prime Micro Inc manufacturing makes use of basic procedures as well as basic and specialty Prime Micro Inc are the only two groups of Prime Micro Inc being made, the procedures can easily make use of automation. The industry has dominant suppliers that have created alliances for innovation from Oriental and Japanese companies. While this has actually led to schedule of technology and also scale, there has actually been disequilibrium in the Prime Micro Inc market.

Threats & Opportunities in the External Environment

According to the internal and exterior audits, possibilities such as strategicalliances with technology companions or growth through merger/ purchase can be explored by TMC. In addition to this, a step in the direction of mobile memory is additionally a possibility for TMC specifically as this is a niche market. Threats can be seen in the type of over dependancy on international players for innovation and competitors from the US and also Japanese Prime Micro Inc producers.

Porter’s Five Forces Analysis