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Salem Telephone Co Case Porter’s Five Forces Analysis

CASE SOLUTION

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Bargaining Power of Supplier:

The supplier in the Taiwanese Salem Telephone Co market has a low negotiating power despite the fact that the market has dominance of 3 players consisting of Powerchip, Nanya as well as ProMOS. Salem Telephone Co suppliers are simple original equipment suppliers in critical partnerships with foreign players in exchange for innovation. The 2nd factor for a low negotiating power is the truth that there is excess supply of Salem Telephone Co systems as a result of the huge range manufacturing of these dominant market gamers which has actually reduced the cost per unit and increased the negotiating power of the purchaser.

Threat of Substitutes & Degree of Rivalry:

The risk of replacements in the market is high provided the truth that Taiwanese suppliers compete with market show worldwide players like Intel, Motorola, IBM, Hitachi, NEC, Toshiba, Samsung as well as Fujitsu. This shows that the marketplace has a high degree of competition where producers that have design and advancement abilities in addition to producing knowledge might be able to have a greater bargaining power over the marketplace.

Bargaining Power of Buyer:

The market is controlled by gamers like Micron, Elpida, Samsung and also Hynix which better minimize the purchasing power of Taiwanese OEMs. The fact that these calculated gamers do not enable the Taiwanese OEMs to have accessibility to modern technology suggests that they have a greater negotiating power fairly.

Threat of Entry:

Hazards of entrance in the Salem Telephone Co production sector are reduced owing to the reality that building wafer fabs and acquiring tools is very expensive.For simply 30,000 devices a month the capital needs can vary 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 latest innovation as well as there for brand-new players would certainly not have the ability to compete with leading Salem Telephone Co OEMs (original tools manufacturers) in Taiwan which had the ability to enjoy economic situations of scale. Along with this the current market had a demand-supply inequality therefore oversupply was currently making it tough to allow new gamers to take pleasure in high margins.

Firm Strategy:

The region's production companies have actually depended on a method of automation in order to lower costs via economic situations of range. Since Salem Telephone Co production uses common procedures as well as conventional and specialized Salem Telephone Co are the only 2 groups of Salem Telephone Co being manufactured, the processes can conveniently utilize automation. The market has dominant suppliers that have actually created alliances in exchange for modern technology from Korean and also Japanese companies. While this has caused accessibility of innovation and also range, there has actually been disequilibrium in the Salem Telephone Co sector.

Threats & Opportunities in the External Atmosphere

As per the inner and exterior audits, possibilities such as strategicalliances with innovation partners or development via merger/ acquisition can be explored by TMC. In addition to this, an action towards mobile memory is likewise a possibility for TMC particularly as this is a niche market. Risks can be seen in the type of over dependence on foreign gamers for modern technology and also competition from the US as well as Japanese Salem Telephone Co producers.

Porter’s Five Forces Analysis