Panasonic is a multinational electronic manufacturing company founded in 1918 and based in the city of Osaka, Japan. In 2019, the company has collected a revenue of 72.5 billion USD showing the success of the company at a global level. The products of the company are sold in different Asian, European, and American countries with high reliability. The company employs a total of 271,896 employees in different offices in the world (Statista, 2020). Porter’s five forces analysis of the Panasonic is presented for the understanding of this innovative industry.
Competitive Rivalry
The electronic industry has grown rapidly over the last few decades due to the involvement of technological innovation in the industry. Samsung is the leader of the electronic industry when it comes to collecting revenue as the company has collected a revenue of 173.96 billion USD in the year 2017. Foxconn is one of the major suppliers of Apple which has collected a revenue of 135.13 billion USD for the same year of 2017. Hitachi’s is at 3rd spot with a revenue of 84.56 billion USD while the revenue for Sony is 70.17 billion USD for the year 2017. Panasonic is the 5th spot in global competition with a revenue collection of 67.67 billion USD. Amer Electronics, LG Electronics, Honey well International, and Mitsubishi Electric come at 6th, 7th, and 8th spot with a revenue collection of 49, 47, and 39 billion USD for the year 2017 (Rowe, 2018). The massive size of revenue collection for these companies is the expression of their strength and ability to compete in this technology dependent business environment. Therefore, the competition in the electronic industry at a global level is intense.
Bargaining Power of Buyers
The bargaining power of the buyers is moderate in the global electronic industry as the availability of options for the buyers is high which is the reason for dominance in the bargaining from one aspect. The electronics industry offers a fast innovation that is not sustainable and every company is offering innovation regularly which is quickly copied by the other. This is making a less difference between the offerings of the company and the switching cost of the consumers is becoming moderate. Brand loyalty due to brand reliability is one of the major factors in this industry which keeps the consumers with the companies. The neutralizing effect of this factor on the number of options available keeps a balance between the power of buyers and companies. Therefore, the bargaining power of buyers is moderate.
Bargaining Power of Suppliers
The bargaining power of suppliers is moderate as the dependence of the companies towards the suppliers is high. It is not only about the innovation of suppliers but it is majorly about the capacity of the suppliers to fulfil the demands. There are limited companies that have such a capacity to fulfil the demands of such international electronics giants. In the same way, the suppliers are also dependant on the companies for the bulk orders making it like a win-win situation for the industry (Hsu & Hu, 2008). Therefore, the bargaining power of suppliers is moderate.
Threat of New Entrants
The placement of a production plant with the ability to produce a range of consumer products requires a high amount of capital in the billions. It means that the electronics manufacturing business is a highly capital intensive business and it is one of the hurdles for the new entrants. No matter what is the level of competency but if the investor does not have millions and billions in the bank account, it is not possible to enter this industry. The growth and the fast innovation in the industry make this industry attractive for the investors as the industry is continuously growing at a global level making it a highly attractive industry for the investors (Mays, 2013). Therefore, the threat of new entrants in this industry is moderate.
Threat of New Substitutes
The technology industry is always sensitive to substitute products as there is a chance of evolvement of any technology that would replace the previous technology. Radio sets are almost completely replaced and the desktop computers are replaced massively by the laptops. The electronic industry can see a substitute for any product any time which is the reason for high risk for substitutes. Therefore, the threat of new substitutes in the electronic industry is high.
References
Hsu, C. W., & Hu, A. H. (2008). Green supply chain management in the electronic industry. International Journal of Environmental Science & Technology, 5(2), 205-216.
Mays, S. K. (2013). Rapid advance: High technology in China in the global electronic age (Doctoral dissertation, Columbia University).
Rowe, S. (2018). The Top ten electronics manufacturers in the world. Available at: https://www.manufacturingglobal.com/top10/top-10-electronics-manufacturers-world
Statista. (2020). Panasonic’s net sales from FY 2009 to FY 2019. Available at: https://www.statista.com/statistics/310115/revenue-of-panasonic/