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

22. Conclusion FIVE FORCES ANALYSIS FORCE THREAT TO PROFITS
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,