Red Star Furniture Group Co Ltd Case Porter’s Five Forces Analysis


Home >> Harvard >> Red Star Furniture Group Co Ltd >> Porters Analysis

Red Star Furniture Group Co Ltd Case Study Solution

Bargaining Power of Supplier:

The distributor in the Taiwanese Red Star Furniture Group Co Ltd sector has a low bargaining power despite the fact that the market has supremacy of 3 gamers consisting of Powerchip, Nanya and also ProMOS. Red Star Furniture Group Co Ltd makers are mere initial equipment manufacturers in critical partnerships with international players for innovation. The 2nd factor for a low negotiating power is the truth that there is excess supply of Red Star Furniture Group Co Ltd systems due to the big range production of these dominant industry players which has lowered the cost per unit as well as increased the negotiating power of the buyer.

Threat of Substitutes & Degree of Rivalry:

The threat of replacements in the market is high given the reality that Taiwanese suppliers compete with market share with worldwide gamers like Intel, Motorola, IBM, Hitachi, NEC, Toshiba, Samsung and also Fujitsu. This indicates that the market has a high level of competition where producers that have layout as well as development capacities along with manufacturing competence might have the ability to have a higher negotiating power over the market.

Bargaining Power of Buyer:

The marketplace is controlled by gamers like Micron, Elpida, Samsung and Hynix which better minimize the buying powers of Taiwanese OEMs. The truth that these strategic gamers do not allow the Taiwanese OEMs to have access to modern technology indicates that they have a higher bargaining power fairly.

Threat of Entry:

Threats of entry in the Red Star Furniture Group Co Ltd manufacturing market are reduced owing to the truth that building wafer fabs and buying equipment is very expensive.For simply 30,000 systems a month the capital demands can range from $ 500 million to $2.5 billion relying on the dimension of the systems. In addition to this, the production needed to be in the current technology and there for new gamers would certainly not have the ability to compete with dominant Red Star Furniture Group Co Ltd OEMs (initial devices makers) in Taiwan which had the ability to appreciate economic situations of scale. Along with this the present market had a demand-supply imbalance and so oversupply was already making it difficult to enable brand-new players to enjoy high margins.

Firm Strategy:

The area's manufacturing firms have actually relied on a technique of automation in order to reduce costs through economies of range. Since Red Star Furniture Group Co Ltd production makes use of conventional processes as well as common and specialty Red Star Furniture Group Co Ltd are the only two groups of Red Star Furniture Group Co Ltd being produced, the processes can quickly use automation. The sector has dominant manufacturers that have actually created partnerships for innovation from Oriental and Japanese firms. While this has actually brought about schedule of innovation and range, there has actually been disequilibrium in the Red Star Furniture Group Co Ltd industry.

Threats & Opportunities in the External Atmosphere

According to the interior and outside audits, possibilities such as strategicalliances with modern technology partners or growth through merging/ procurement can be checked out by TMC. A step towards mobile memory is also a possibility for TMC particularly as this is a particular niche market. Dangers can be seen in the type of over reliance on international gamers for modern technology and competitors from the United States and Japanese Red Star Furniture Group Co Ltd makers.

Porter’s Five Forces Analysis