Harvard business case on Schott Zeiss

Essay by annemiekeUniversity, Master'sA-, June 2004

download word file, 10 pages 1.7

QUESTION 1

What are the competitive forces Carl Zeiss is faced with?

In finding out with what competitive forces Zeiss is confronted with, Porter's five forces model will be used to examine the business environment:

Industry competitors

As of the mid 1970s, Carl Zeiss' competitive position began to erode, as was the case with other pioneering German companies. Due to shifts from conventional to innovative technologies, such as OptoElectronics, and strong international competition, Carl Zeiss' market share decreased in the end 90's. By that time Japan is delivering 34.5%, the US 9.7%, and Germany 11.9% to the world market imports.

New entrants

Especially low cost producing companies, mainly based in the Japanese region, can be considered as a threat. Carl Zeiss is focused on high quality and high price. Especially in the camera sector, new entrants from emerging countries are expanding their market share with standardized products and low prices.

Suppliers

Carl Zeiss is operating in a low volume/high price and quality market. Suppliers therefore are not interested in investing in engineering, R&D expenditures and/or collaborative efforts. Also, Carl Zeiss has limited purchasing power because of the fact that there are more companies faced with the problem of many suppliers servicing low volume specialised demand.

Buyers

Major customers of Carl Zeiss are public or semi-public institutions like universities, hospitals and the military. Meterology is also sold to automotive Original Equipment Manufacturers (OEM's), and in recent times the semi-conductor market is an important player as well as the computer and automotive industry, due to technological development.

Export is essential in Germans' optical industry. Carl Zeiss is the largest German optical company and focused on high quality and/but on high price. This will make Carl Zeiss at the same time more and less competitive.

Substitutes

There is no explicit threat from substitutes,