Ossur's Production Plant Start-up in China / ID: 457331

Author: Lika (21)

Evaluation:

Published: 07.12.2010.

Language: English

Level: College/University

Literature: 11 units

References: Used

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Table of contents

Nr.	Chapter	Page.
	Introduction	4
1.1.	Motivation for the Choice of the Problem Statement	5
1.2.	Problem Statement	5
2.	Methodology	6
2.1.	Methods	6
2.2.	Delimitation	7
2.3.	Financial Assumptions	7
3.	Threat of New Entrants	8
3.1.	Economies of Scale	10
3.2.	Product Differentiation	11
3.3.	Capital Requirements	12
3.4.	Switching Costs	12
3.5.	Access to Distribution Channels	13
3.6.	Cost Disadvantages Independent of Scale	13
3.7.	Government Policy	15
3.8.	Expected Retaliation	15
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
7.	SWOT Analysis	20
7.1.	Strengths	21
7.2.	Weaknesses	21
7.3.	Opportunities	22
7.4.	Threats	22
8.	Literature	24

Extract

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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