Strong market positionManufacturing themselves| Less-efficient about their system| Opportunities(Potential benefit)| Threats|
Cost reduction| Fierce competition|
Strong market position
Osram is the second largest lighting equipment manufacturers in the world (22% of sales), and Europe as well (34% market share).
Since they manufactured approx 90% of their products themselves, they are less-affected by the power of the buyer.
Less-efficient about their system
Osram has no strong advantages about their goods, inefficient warehouse system, and ordinary customer service compared to major competitors’.
As Osram GmbH try to re-arranging the number of warehouses, certainly it allows for improvement of service level and lead time, decreasing the total inventory level and centralization of purchasing. According to this, it is expected to significant cost savings for them.
In 1989 GE began to advance in the European market, with a couple of huge M&As. And the many minor companies in this industry have reduced significantly by acquisition. It could make competitors’ stronger, and since then the full-scale price war has begun.
FlexibilityEconomics of scale| Variables from the replacing warehouse| Opportunities(Potential benefit)| Threats|
Cost savingsGrowing demand for safety and save energy| Intense competition|
After Osram GmbH took over all European stock entirely and authority of controlling logistics, purchasing from the BG’s, the Euro-logistics team of Osram GmbH could advance in the decision-making process because they don’t have to wait for the order from the BG’s. And it gives the company a clear view of inventory planning, central purchasing which reduces transaction cost, and actual demands and so forth.