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orter's Five Forces: New Lights for Classic Styles

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Elisabeth Barrett

Do a Porter's $5$ Forces analysis.

John

Sounds like a good idea.

Here's some background research I gathered about our proposal and some information on the lighting industry in general.

John

At this point, which force do you think should be our biggest concern?

New Entrants

Buyers

Rivalry

Suppliers

Industry Background

Materials

Industry Background

Industry Background Facts

Industry is projected to grow at $1\mathrm{.}5\frac{\%}{y}$ear for the next few years

Lighting fixtures industry is roughly $$4$ billion worldwide

Manufacturing

Mostly smaller manufacturers

Few, if any, manufacturers have a recognized brand

Popular designs are rapidly copied

Patents offer little protection

Technology for internet$-$connected smart fixtures is growing slowly

Creating specialized production lines is necessary

Distribution Channels

Many smaller manufacturers sell directly through large retailers such as Home Depot, Target, and Walmart

Some retailers offer their own private label brands

Large manufacturers sell directly through their websites $($as well as through retail$)$

Individuals often compare prices across all channels before making a purchase Suppliers

Primary materials are commodities like metal, wood, plastic, and glass

Most manufacturers use a wide variety of suppliers for these commodities

Each commodity has a large number of suppliers from which to choose

Startup Process

An efficient factory can cost between $$15-50$ million dollars

Outsourced manufacturing can reduce initial costs for a niche player to less than $$100,000$

The regulations are simple and straightforward for lighting fixtures

Marketing expenditures can be controlled through targeted ads