Havells Case Study

Lighting Industry

General Environmental Analysis

This analysis is done in prospective of company

Political:- Favourable

1. Indian Government started Ujala program which gives subsidy to encourage households to use LED lights.
2. Government started Domestic efficiency lighting programme. Under which govt has planned to replace all street lights with LED lights.
3. Make in India initiative has encouraged the supplier market to supply raw material to this industry.

This has lead to reduce the entry barrier for the new entrant as well as helped to increase bargaining power of supplier and buyers

Socio-Cultural:

1. More concerns for energy saver instruments amongst the citizens of India
2. Preference for the lights which gives higher life than cost benefits

This has helped to reduce bargaining power of buyers and increase the intersegment rivalry and new technology which can increase the life is more factorable so it also increased the threat of substitute

Technological:-  Moderate

1. Main row material for the lED lights is conduction chip which is imported in India mainly from China.

This can impact on threat of substitute, increased bargaining power of supplier.

Economical Factor:- Facourable

1. GST will impact positively across the industry.
2. Rupee depreciation in recent years have reduced the profit for the company because main row material is imported from outside.

This leads to increased bargaining power of buyer and also reduce the threat of new entrant

Forecast for the lighting industry is shown in the figure given below

[pic 1]

Porter’s Five Forces

Inter Segment Rivalry: -

1. herfindahl index for the lighting industry is 900 which shows that industry is unconcentrated with moderate to high level of competition.
2. As shown in the figure Phillips s main global competitor and Surya and Wipro and Havells are the main India companies in this Indian lighting industry.

As shown in the figure below each company is moving towards the LED lighting from CFL

[pic 2]

Threat of New Entrant: LOW

1. High sunk cost is required in the industry and that is the element which limits the competition
2. Strong brand name and patent are important to sustain in the industry

Threat of Substitute: Moderate

1. History shows the evolution in the lighting industry. Starting from the filament bulb to Halogen lights to CFLs and now LED
2. LED chip is made from the semiconductor chip which decides the life and intensity of the light. Experiments are going on to increase both life and intensity of the light.  

Bargaining Power of Buyer:- Low

1. As discussed earlier B2B and B2C both customers are concerned for the life of the light.

Bargaining power of supplier:- High

1. Raw material for LED lights that is semiconductor chips are not manufactured in India
2. China is the main supplier for these type of chips so Indian manufacturing firm depends on them only
3. Moreover these firms requires high volumes so it is important to reach to their required figures

Diversification

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