Airconditioner Industry in India — Presentation Transcript * 1. AIRCONDITIONER INDUSTRY ANALYSIS Subject: Business StrategyIndustry: Consumer Durable(Air Conditioner) Company: Bluestar Haresh Ashar(01) Prashant Arekar(19) Narayanan Palani(09) Devina Deshmukh(02) * 2. INDUSTRY ANALYSIS CONSUMER DURABLES • Consumer durables Sector can be classified as follows: – Consumer Electronics includes VCD/DVD, home theatre, music players, colour television, cameras, camcorders, portable audio, etc – White Goods: include dishwashers, Air Conditioners, water heaters, washing machines, refrigerators, vacuum cleaners, kitchen appliances, non-kitchen appliances, microwaves, built-in- appliances, tumble dryer, personal care products, etc. – Molded Luggage includes plastics – Clocks & Watches * 3. AIR CONDITIONER INDUSTRY
* 4. INDUSTRY-In 2008-09, the estimated total market size for air-conditioning in India was around Rs. 10,250crores. Of this, the market for central air-conditioning, including central plants, packaged/ductedsystems and VRF systems was about Rs. 5750 crores, while the market for room air conditionerscomprised the balance Rs. 4500 crores.-The commercial air-conditioning segment catering to corporate and commercial customersamounted to around Rs. 8000 crores.-The market for commercial refrigeration equipment and systems was estimated at around Rs.2000 crores. Rs. 2,000 Crores Rs. 5,750 Central and Crores Packaged Air- Rs. 4,500 Crores conditioning Systems *
* 5. PORTER’S FIVE FORCES/1 Threat of new entrants(LOW) Capital Requirements The initial investment that goes into setting a plant is considerably high as there needs to be sufficient investment in providing quality components and also in R&D to meet the changing technology. Thus there is a low threat of entry into this sector. Economies of Scale Manufacturers in HVAC industry need to build economies of scale due to high fixed costs and meet the demands. Due to this there is a low threat of entry into this sector. Customized Products In the central and packaged AC system level of customization is high and it is not possible for new player to do that customization. Due to customization, the threat of new entrants is low. Switching costs It is not easy to switch to the new players in the field due to high initial investment & also a number of collaborations & contracts exist among the players of the world who are into the same line of business. There is thus a high switching cost and thus a low threat to entry. Distribution Channels The existing players have strong distribution channels and thus difficult to match proving to be a high barrier of entry. * 6. PORTER’S FIVE FORCES/2 Bargaining power of suppliers(HIGH) Supplier Concentration There is comparatively higher number of suppliers. So the bargaining power of suppliers is low. Importance of volume to suppliers The industry is dependent on volume sales and hence facilitates bulk buying. This reduces the bargaining power of the suppliers. Presence of substitute inputs In the current scenario there is little substitution that is possible to the raw materials that go into the manufacturing of air conditioning products. This increases the bargaining power of suppliers. * 7. PORTER’S FIVE FORCES/3Bargaining power ofbuyers(HIGH)Quality vs PerformanceThere are large numbers of players in themarket. So quality and performance isthe most important factor while selectingthe product. It gives high bargainingpower to buyers.Backward IntegrationBackward integration to make the airconditioners means a high investmentand also expertise in the manufacturingwould be required. Bargaining powerwould be less since the probability thatthe companies would integrate backwardwould be less. * 8. PORTER’S FIVE FORCES/4 Firm Rivalry Size of Industry The industry is not concentrated & there are large number of Indian companies and MNCs, hence there is a high degree of rivalry. Industry Growth rate As...
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