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Ossur's Production Plant Start-up in China
|1.1.||Motivation for the Choice of the Problem Statement||5|
|3.||Threat of New Entrants||8|
|3.1.||Economies of Scale||10|
|3.5.||Access to Distribution Channels||13|
|3.6.||Cost Disadvantages Independent of Scale||13|
|3.9.||Experience and Scale as Entry Barriers||16|
|4.||Bargaining power of suppliers||16|
|4.1.||Market dominated by a few large suppliers||16|
|4.2.||No substitutes for the particular inputs||17|
|4.3.||Supplier’s customers are fragmented||17|
|4.4.||Switching costs between supplier are low in China||17|
|4.5.||Forward integration of the supplier||17|
|4.5.1.||The buying industry is more profitable||18|
|4.5.2.||Economies of scale for the supplier||18|
|4.5.3.||The buying industry hinders the supplier’s development||18|
|4.5.4.||The buying industry has low entry barriers||18|
|4.6.||Government as a force in industry competition||18|
|5.||Bargaining power of buyers||18|
|6.||Threat of substitute products||19|
|6.1.||Competitive Rivalry between Existing Players||20|
According to Össur’s Annual report from 2009 even though this company is one of the most successful companies in the manufacturing of non-invasive orthopedics, it faces the risks of losing their position as Market leaders due to inappropriate assumptions of the market trends.
Following Össur’s annual report 2009 their future vision is to maintain leadership role non-invasive orthopedics market. Consequently the characteristics of the current and future market trends and globalization suggests that the only way of achieving such goal is to follow a well-structured and promising growth strategy.
Össur’s strategy indicates increasing profitability as one of its key points and this is to be done through efficiency and economies of scale. Össur will always strive to seek new opportunities for further optimization.1
The Asian market area presents a variety of characteristics that can offer promising and potentially profitable opportunities that matches Össur’s interests concerning their vision. There are several factors that are seen as strong motive to consider Asia to be a great market opportunity of growth.
The company is already located in China but not at a very significant scale compared to its activities in Europe and North America. They have an Asian head office, sales, marketing, distribution, R&D and outsourcing activities, however Össur Asia accounts only for 4% of the company’s total sales and 26% of the manufacturing is outsourced to Asia. This means that the already know the area and their main competitors making them able to adapt fast to local market trends when expanding the business establishing production. …
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