We have chosen to analyze the consumer electronic hardware industry and the companies that we will focus on as a representative of the industry are Samsung, LG, Sony and Panasonic. While we were seeking for companies to analyze, it was difficult to pick a group of electronic companies that produces and competes on exactly the same products and services. The companies that we have selected are the closes in their business model, that each is involve in manufacturing television, audio equipment, mobile phones, cameras, and computers. We will use the porter five-factor model to analyze the industry and also focusing on the companies that we have selected.
These industries have low threat of entry as has an exceptional barrier to entry that will preserve profitability. The manufacturing of these consumer hardware are very capital intensive as it requires a high initial investment on the manufacturing facilities. Companies in the industry also benefit from having economies of scale. As a result of the high initial capital investment, which means that the average cost of manufacturing, these products will reduce the more the company’s produces. The product that is produce by the industry, typically have a moderately high switching cost. Even though these are consumer electronics and are affordably to most consumers but it is still not something that most consumers would constantly change unless there is a huge technological improvement. Another barrier to entry is that the industry requires a high level of technological know-how and proprietary innovation and patents. Products like smartphones, cameras and television uses many high technological hardware that would requires the investment of billions of dollars in R&D and also many years of research to acquires feasible development. These will make it almost impossible for a new small company to readily enter the market without having any patents and proprietary technology to compete with.
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