electronics industry

PORTER’S FIVE FORCES MODEL

1. Rivalry Among Existing Competitors - (High)

• Numerous and equally balanced competitors – As there are already large numbers of competitors in this industry, rivalry for better quality at a cheaper price is quite high.

• Shorter Product Life-Cycle – As the technology is growing at a rapid pace, the life cycle of products has become relatively shorter.

• High R&D costs – To come up with a better or a substitute product with better added features it requires great deal of investment in research and development which can be very risky because if the product fails then the costs incurred are sunk costs and cannot be recovered.

• Imitation of technology – As the concept of reverse engineering has enabled everyone to imitate the technology that the rival company uses, it becomes a difficult task to maintain exclusivity and uniqueness.

• Low profit margins – As the competition is high in this industry the prices has to be kept minimal so that customers do not buy other brand with same specifications. This in turn reduces the profit margin if the firm.

• High exit barriers – As there are huge fixed costs associated with setting up of industry, therefore exiting from business means excessive losses which are almost impossible to recover.

2. Threat of New Entrants - (Low)

1. Economies of scale – It is very much significant as the fixed cost associated with setting up a manufacturing plant is quite high due to inefficient infrastructure, less supply of water and electricity, reasonably high cost of capital and continuous up gradation of technical and managerial efficiencies.

2. Product differentiation – Even though consumers are getting more and more aware about differentiated products but still i...

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...face Mounted Technology (SMT)/Auto

Insertion. Skilled manpower for handling SMT/auto insertion machines are expected to be a severe shortage

• Corporate Social Responsibility (CSR)

Environmental

• Environmental Protection Agency of India – As of date this agency do not regulate e-waste and local govts for the collection of electronic waste and disposing them.

• E-Waste Management (Waste like Lead, Cadmium, Mercury, etc.) – The total waste generated by the electronic industry amounts to 1600000 tonnes per annum. In India the e-waste problem has not been properly addressed Hazardous waste rules 1989(amended in 2003).

Technological

• Degree of Automation

• Emerging Technologies

• Impact of Internet

• Rate of Technological Change

• R&D Activity

Legal

• Tax Policies

• Labor Laws

• Trade Restrictions

• Government Acts (Ex: Environmental Protection Act, 1986)