Firm Strategy, Structure, and Rivalry
- The increase in the LED demand and the urgency of the situation have attracted LED light producers
- Japan's lighting market is concentrated
- Price war among LED light producers in Japan
Chance
Thank You!
Government
Conclusion
- Fukushima nuclear disaster in 2011 impacted energy requirements in Japan
- Most nuclear power plants shut down (covered 30% of energy production)
- Nation-wide efforts to reduce energy consumption
- Banning production of incandescent light bulb production
- Supply side - more focus on renewable energy and other sources of energy
- Demand side - preference towards energy-efficient products
- Launched awareness-rising campaign to promote the elimination of inefficient lamps
- High rivalry among firms; well-established and well-known companies in Japan: Panasonic, Philips, Toshiba, etc.
- Price war among producers driving prices down and pressure on costs
- Access to highly developed technology and skilled labor available
- Increasing demand for LED lighting supported by government initiatives
- Low interest rates
- Resistance towards mergers and acquisitions; cultural barriers
Recommendation
Strategic alliance in order to take advantage of each-other's core strengths
Macroeconomic Analysis
Demand Conditions
Porter's Diamond
Factor Conditions
- Japanese consumers are sophisticated and very demanding and they prefer energy-saving products
- The market for LED lighting is expected to grow at CAGR of 18% over the period of 2014-2019
Land: Nationwide land prices fell for the seventh consecutive year in 35 prefectures out of 47
Labor: Japan is experiencing 'demographic' labor shortages because of the decreasing population; it has the highest average skill level compared to other OECD countries
Capital: Japan has a liquid capital market; extremely low interest rates
Technology: Highly developed technology; LED light manufacturing is capital intensive
Country-Specific Developments, Opportunities, and Risks
Actual and projected LED average price for 40 watt and 60 watt equivalents
- 3rd largest economy in the world
- Japan's economy is recovering after the "lost decade"
- FDI as a percentage of GDP = 3.4%
- Government has eliminated most formal restrictions on FDI
- Foreign exchange transactions are freely permitted
- No expropriation risks
- Stable political environment
- World Peace Index - Japan 8th place out of 162 countries
- Japan has traditionally been resistant to mergers and acquisitions
- Japan corporate tax rate = 37% (U.S. = 39%)
- Cultural and linguistic barriers
- Electrical power cuts in northeast Japan
Related and Supported Industry
Agenda
Currency Valuation
- Construction
- Mobile phone
- OLED
- Manufacturing of silicon chips
Parity Conditions
- Forward exchange rate
- Interest rate parity
- Big Mac Index
- Introduction
- Macroeconomic Analysis
- Porter's Diamond
- Currency Valuation
- Country-Specific Developments, Opportunities, and Risks
- Conclusion and Recommendation
Determinants of Future Exchange Rate
- Relative real interest rates
- Prospects for economic growth
- Supply and demand for assets
- Speculation and liquidity
- Political risks and controls
Currency Prediction
- Current account balances
- Portfolio investment
- FDI
- Exchange rate regimes
- Official monetary reserves
- Spot rate USDJPY = 123.10
- Big Mac Index - Yen is undervalued by 38%versus the U.S. dollar
- Relative PPP - Yen should appreciate against the U.S. dollar
LED Light Bulb Manufacturing in Japan
Shqiponje Bislimi