A Digital Lighting Company Case Analysis
The main dilemma Sean Marshall, CEO of Spectio, is facing is to decide whether the company should be further managed as a lighting company or an IoT company. The company first started as a lighting company and looked to exploit the growing popularity of LED lights as the main source of revenue for the company. At that time, LED was deemed as an efficient power saving lighting system but on the other hand, the manufacturing cost was high and the efficiency was not gained as expected. Hence, Spectio decided to combine wireless technology with the LED lighting system in order to release a new LED lighting system that could be wirelessly controlled. In order to analyze the situation, Porter’s Five Forces is used as follows.
Threat of New Entry – Threat is in both lighting industry and IoT, although in IoT, threat is relatively less. As a result, Spectio can expect for competitive rivalry in the lighting sector in near future.
Buyer Power – Buyer power is significantly high in lighting industry while in IoT, it is slightly less. However, with future high profile clients in IoT, Spectio can expect high buyer power in future.
Threat of Substitution – Threat of substitution is much less in IoT whereas in the lighting industry, there are many alternatives and competition.
Supplier Power – The supplier power is more in lighting industry that IoT. This is because, IoT is a relatively new industry and not many suppliers are available for IoT yet.
Competitive Rivalry – There is less competitive rivalry in the IoT sector. This is because, IoT is a relatively new industry and very few companies have entered this industry.
Based on the analysis, it can be said that the best possible option for Spectio is to slowly make transition towards the IoT industry as it the most promising for Spectio and moreover, it has low competitive rivalry. Furthermore, with transition towards IoT, Spectio can get hold on some big money contracts and hence, will be able to gather high revenue easily.
Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.
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