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Five-Forces Lighting Industry Analysis

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Presentation on theme: "Five-Forces Lighting Industry Analysis"— Presentation transcript:

1 Five-Forces Lighting Industry Analysis

2 I. Factors Affecting Rivalry Among Existing Competitors (A-1)
Oligopolistic Market Major Producers Acuity Brands and Hubbell OSRAM Sylvania Philips Lighting TCP International Zumtobel General Electric

3 The Big Three OSRAM Sylvania Philips Lighting General Electric

4 Industry Shifting Industry Trend
Incandescent bulbs → CFLs → LED bulbs Market will consist of estimated 61% of LED bulbs by 2020 (A-1)

5 LED Competitors (A-2) Samsung LG Sharp Cree Veeco Why?

6 Industry Growth Overall from 2012 to 2017 projected to be 4.8% on average (A-1)

7 Race for Patents (A-4) 2000 to 2003 Company # of Patents Philips 69
OSRAM Sylvania 41 GE 27

8 Trend Setters (A-4) Color-changing bulbs Motion-sensing bulbs
Brightest energy-saving bulbs

9 II. Factors Affecting the Threat of Entry
LED lighting industry on path to securing up to 80% of market share for lighting by 2020 (A-5) Steady cost reductions and improved technology performance make new companies want to enter LED lighting industry

10 New Threat example Founded by former Philips Lighting CEO Ludo Carnotensis Now has 10% market penetration Able to beat out Philips for shelf space

11 OSRAM’s Advantages Benefits greatly from Economies of Scale
Newly released 100 W-equivalent LED bulb Better quality Lower price Vertically integrated with solid positioning from upstream chips to downstream lighting fixtures and applications

12 III. Factors Affecting or Reflecting Pressure from Substitute Products and Support from Complements
Substitutes for light from conventional light bulbs Natural, ambient light Candles Lack of true substitutes in market is beneficial for lighting industry

13 Brand Substitutes “Substitutes erode profits in the same way as entrants by stealing business and intensifying internal rivalry” (A-9)

14 Viability of Substitutes
Availability Very accessible Price-value characteristics “The tremendous volume of products sold through these channels creates highly competitive pricing” (A-1) Similarly priced, similar value Ability to gouge is diminished

15 Viability of Substitutes continued
Generally in lighting industry, demand is price inelastic “When the industry-level price is large, rising industry prices tend to drive consumers to purchase substitutes’ products” (A-9) Among brands, demand is elastic Competition

16 Complements “Complements boost the demand for the product in question, thereby enhancing profit opportunities for the industry” (A-9) Shift toward light fixtures and corresponding light bulbs Light fixtures 80% of industry revenue (A-1)

17 IV. Factors Affecting or Reflecting Power of Input Suppliers
“Sales margins for lighting equipment manufacturers have been hurt by increased cost of raw materials” (A-1) Suppliers of raw materials have power Price control

18 Danger of Price Increase
More initiative on developing cheaper light bulbs Less expensive or fewer raw materials used Shift focus from producing energy-saving bulbs Suppliers have overall stability Steady industry means constant production

19 V. Factors Affecting or Reflecting Power of Buyers
Two main consumers Businesses Homeowners Businesses larger demand for lighting solutions Retail accenting Office work space

20 Pressure from Buyers Because lack of pursued substitutes, buyers constant demand Steady consumer purchases of light bulbs Constant pressure on manufacturers to produce “Nationwide home improvement centers, lighting distributors, and general contractors assert significant price pressure on manufacturers” (A-1)

21 Business Challenges Constant demand causes challenge for manufacturers
Good for productivity in business Future goals and projects

Internal Rivalry High Entry Medium Buyer Power Supplier Power Substitutes Real: low, Brand: high Complements

23 References A-1: "Lighting Equipment Manufacturing." First Research. L.E.A.R.N., 12 Aug Web. 13 Sep <>. A-2: "Estimated LED penetration of the Global Lighting Market from 2010 to 2020." Statista. Goldman Sachs, 01 Jan Web. 13 Sep estimated-led-penetration-of-the-global-lighting-market. A-3: "Lighting Industry: Structure and Technology in the Transition to Solid State." Industry Studies National Academics, 08 Apr Web. 13 Sep 2013. A-4: "Lighting Controls Market in North America." Verify Markets. N.p., 01 Sept Web. 13 Sep 2013. A-5: “The Path to 80 Percent Market Share for LED Lights.” Greentechmedia. Stephen Lacey. 30 April 2013. A-6: “OSRAM SYLVANIA wins race to offer 100W-euivalent LED A-lamp.” Industry News. Maury Wright. 13 Nov 2012. A-7: “OSRAM SYLVANIA’s 100W-equivalent LED bulb may be pick of the bunch.” Gizmag. James Holloway. 11 May 2012 A-8: “Lighting Applications – The Final Battleground.” CommonWealth Magazine. Fuyuan Hsiao. 04 Jun 2009. A-9: Besanko, Dranove, Shanley, and Schaefer, Economics of Strategy (4th edition), John Wiley & Sons, Inc., 2007. A-10: Lowe’s, CFL Bulbs, LightingFans%7CPopularCat-_-Merch%7CCFL_Bulbs&cm_cr=Light+Bulbs-_-Web+Activity-_-Light+Bulbs+Top+Flex+Activity-_- SC_Light+Bulbs_TopFlexible_Area-_ _1_#!. A-11: GE Commercial Lighting Products, Where to Buy,

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