Mid-Term Case Analysis Arborite STRATEGY 669 Winter 2007 Group 15 Jiji George Gilles Monniaux Taro Nagao Nanda Rajanala Sharad Srivastava Q1.What do Porters forces say approximate to the assiduity? The abbreviation has been conducted for the Canadian HPL market place only as that was the focus of this case. ground on our analysis of this industry use the five forces framework, we cerebrate that this industry was not attractive. The detailed analysis used for this proof is presented in Exhibit 1 of this paper. The cerebrate behind our diagnosing is given below. Barrier to Entry (High): The market for the HPL in Canada is close to 100 Million dollars. Assuming a high dinero margin of 20%, the total meshwork of the industry ordain be near 20M. The investment for a new nominate is 70 gazillion dollars. If an entrant family has about 10% of the share (compared to the incumbent share of 35%) the expediency for the company pull up stakes be abou t 2 M. Ignoring the discount rate, it will take about 35 years to recover the equal of the new plant. This shows that the industry is cracking intensive and it will be not an easy finish for a company to embark this industry. Additionally the plants are a racing shell intensive investment. For a 250 million sq ft plant the rate per square feet comes to 0.
25 whereas for an 80 million sq ft facility this rate is 0.43. The vari fit exist of this little plant is also about 150% of the larger plant. So a new player trying to commemorate the industry with a pifflinger plant faces huge address disadvantages . The opposite individual processes also! seem to be scale foliage intensive as evident from the importance of MES at each(prenominal) direct of value chain. The government duties also make it tight for small players to enter Canadian market. WilsonArt and Formica are able to cudgel these barriers as they had attained a certain scale in manufacturing and procurement. The product differentiation in this market is in the beginning place based on delivery service and it energy be difficult for a new entrant...If you want to hasten a full essay, order it on our website: OrderCustomPaper.com
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