3D Printing Market - Assignment Example

3D Systems: Case Analysis By al Affiliation> September 14, First question: Industry plus Macro Analysis of the Industry (case study 3D printers). Discuss the impact of the disreputable technology on the 3d industry apply a pest and porter five forces model. Try to find a trend and apply data to explain the idea. Introduction The case entitled “3D Systems” written by Lakhani and Lane (2014) presented a overview of the 3D printing industry. Considered as a disreputable technology, 3D printing perfectly exhibits “one that displaces an established technology and shakes up the industry or a ground-breaking product that creates a completely new industry” (Disruptive Technology, 201, p.1). As such, the 3D printing industry would hereby be more closely evaluated in terms of the industries seen to be disrupted; as well as the forces influencing the industry. The concluding portion would determine a trend to explain the 3D technology in general. The 3D Printing Industry The 3D printing industry has evolved from prototyping to manufacturing Lakhani and Lane (2014). As clearly explained by Lakhani and Lane (2014), “3D printing was an additive production process that, using varied techniques, repeatedly deposited one thin layer of material at a time that fused, bonded, or adhered to adjacent layers to create an integrated whole” (p. 2). A more comprehensive analysis of the 3D printing industry would be presented through the PEST analysis and the Porter’s five forces framework. PEST Analysis Political: There are significant political factors that are perceived to impact the industry including the need for more stringent regulations pertaining to identifying users (purchasers) of 3D printers and for specifically identified purposes. This is relevant to avoid misuse of products being produced from these printers. Likewise, aside from identifying authorized users through proper licensing to conform to government regulations, the possibilities of coming out with diverse products might also increase preponderance of misuse or abuse that could endanger the lives of the public. Economic: The economic impact of proliferation of 3D printing includes potential losses of jobs, especially in manufacturing firms that are seen to belong to the industries to be disrupted. Likewise, closing or potential bankruptcy of manufacturing firms would be detrimental to the economy in terms of lesser tax revenues for the government, lesser purchasing power for consumers who lose their jobs, as well as lesser funds to be earmarked for infrastructure and economic development projects. On the positive side, more goods manufactured locally would be made available, making cheaper alternatives easily accessible to the consumers. Social: More interaction is perceived to be made possible across diverse peoples from all walks of life. There would be increased sharing in 3D designs from varied fields of discipline. As such, social interactions from the online medium, among other media sources, are seen to proliferate. Likewise, the 3D printing technology is also foreseen to expand in the international market and be applicable in a more global sphere. As disclosed in the case facts, “3D printing is a canvas for the future that anyone can use to communicate, create, express, and educate” (Lakhani and Lane, 2014, p. 8). Technological: One of the most pronounced technological impact of 3D printing is its applicability in a wider range of clientele: from businesses to residential clients (PESTLE Analysis n.d.). The technology is expected to eventually evolve and transform manufacturing of products and “enable the customer to purchase designed goods from the Internet and print the final product and electrical components from a household 3D system” (PESTLE Analysis, n.d., p. 1). Likewise, it would open doors for greater investment opportunities for discovering other applications in this field of endeavor. Porter’s Five Forces Threat of new entrants: From the case facts, it could be deduced that 3D printing invites entrants in the industry. By thinking of ways to make 3D printers more affordable, more entrants into the 3D industry are seen to abound. Thus, it could be deduced that there is immense threat for new entrants in the industry due to the easy access and absence of formal restrictions or regulations. Threat of substitute products or services: As consumers eventually become competitors, it is also deduced that there is increased threat for substitute services in the 3D printing industry. As such, eventually the market is seen to be congested as consumers acknowledge the lucrative potentials for profits. Bargaining power of buyers: When seen from the perspectives of buyers (or consumers), at this point, there is minimal bargaining power of buyers. 3D printer providers (manufacturers and marketers) could still dictate the price of the products and customers (businesses and individual consumers) adhere to the stipulated market price. Eventually, when 3D printing technology evolves, bargaining power of buyers are seen to increase. Bargaining power of suppliers: There is strong bargaining power of suppliers as 3D technology is in its introduction to growth stages. Likewise, there are still few suppliers in the industry which can influence and dictate strategies in the target market. Rivalry among existing competitors: The competitors in the market are still limited; yet slowly increasing. Exhibit 6 in the case facts revealed the number of competitors within identified printing technology and manufacturer (Lakhani and Lane, 2014, p. 19). Conclusion Growth prospects for the industry are robust. According to Canalys, “the size of the market, including 3D printer sales, materials and associated services, reached US$2.5 billion globally in 2013. Canalys predicts that this will rise to US$3.8 billion in 2014, with the market continuing to experience rapid growth, reaching US$16.2 billion by 2018. This represents an expected compound annual growth rate (CAGR) of 45.7% from 2013 to 2018” (Canalys, 2014, par. 1). As such, according to Ehrlich and Fu (2013), the 3D printing industry would disrupt seven industries, noted as follows: food, medicine, military, electronics, jewelry, toys, and automotive. Second question: 3 or 4 of the most strategic issues in the case study and discuss the implication on the opportunity and threats of this market. Mention one financial issue. Try to draw a diagram, apply the resourse based view of the firm with the valuable and imitable. Try to make an organizational analysis of the firm. Introduction The strategic process is viewed as multidynamic and interactive (Mintzberg, Ahlstrand and Lampel 2009). Accordingly, strategy was viewed as expounded through ten (10) schools of thought: as a process of conception, formal process, as well as analytical, visionary, mental, emergent, negotiative, collective, reactive, and a process of transformation (Mintzberg, Ahlstrand and Lampel 2009). With these thoughts in mind, the most strategic issues in the case study are presented herewith; including the implications on the opportunity and threats in the market. Strategic Issues in 3D Systems The strategic issues faced by 3D systems are as follows: (1) a determination on the best option for Cubify; (2) a discernment on the possibility of producing cheaper 3D printers at the price range of $1,000; (3) to partner with third-party developers, sports and entertainment brands, to expand 3D printing with the Cube; and (4) be actively involved in the discovery of a “killer app”, a software program, to specifically cater to 3D printing (Lakhani and Lane, 2014). Implications on Opportunities and Threats in the 3D Printing Market These strategic issues facing 3D systems have the following implications on the opportunities in the 3D printing market: (1) continued growth in the 3D printing industry that could benefit consumers in terms of accessibility to innovative designs that emerge and evolve in the market; (2) increased competition would increase prospects to lowering prices of 3D printers, peripherals, and applications; (3) consumers would be provided with greater privileges for creativity and innovativeness in designs, as well as in discovering new ways of applying products manufactured through 3D printing. Likewise, as revealed by Gilpin (2014), the 3D printing market would enable the following opportunities: (1) lessen waste and carbon footprint brough about by minimization of traditional manufacturing; (2) creation of a new art medium; (3) creation of innovative instructional approaches; (4) enable 3D printing in zero-gravity environment; (5) revolutionize mass manufacturing at unprecedented scale; (6) increasing patterns in bioprinting; (7) create innovative applications at home; and (8) reach out to disconnected markets on a global scale. On the contrary, the threats in the 3D printing market include: (1) infringement of intellectual property rights; (2) potential intrusion of privacy and confidentiality; and (3) increased preponderance for security and personal identity threats. As emphasized, “expensive or designer objects can also be reverse-engineered or replicated and sold at a cheaper price” (Gilpin, 2014, p. 1). Financial Issue A financial issue that was disclosed in the case involved the decision to manufacture 3D printers at lower prices, specifically from the $1,299 level to the $1,000 targeted price (Lakhani and Lane, 2014). The reduced pricing strategy should be evaluated in terms of potential volume of sales that are projected to be increased, as a result of the lower price. As noted, the price reduction also comes with improvement in product features: improved quality brought about by greater speed in printing, greater surface resolution, or lesser materials cost. Further, the $1,000 price level was also being evaluated in terms of affordability to the target clientele. Resource-Based View of the Firm According to the resource-based view (RBV), “firms can earn sustainable supra-normal returns if and only if they have superior resources and those resources are protected by some form of isolating mechanism preventing their diffusion throughout industry” (Resource Based View of the Firm, 2014, p. 1). The diagram below highlights the theoretical framework of the RBV: Source: Resource Based View of the Firm, 2014 Applying the RBV framework to 3D Systems, the organization has valuable resources in terms of competencies in product development, specifically of 3D printers, especially in the following technology type: fuse-deposition modeling, material jetting, photopolymerization, power binding, and selective laser sintering or direct metal laser sintering (Lakhani and Lane, 2014). In one specific technology, 3D Systems was noted to dominate the market: power binding at 97% of the market share. As such, in the particular technology, 3D Systems is considered imperfectly imitable and non substitutable. Conclusion With the opportunities and threats facing 3D Systems, in conjunction with the RBV model, it could be deduced that the organization has evidently shown strengths in the 3D printer market, specifically in the power binding technology. As such, they could tap the other technologies to expand their market share and develop competencies in these areas. Likewise, the investment opportunity that would be most viable to pursue would take into account the financial resources of the firm, after evaluating strategic choices using the Ansoff matrix and the SAF model. Third question: Provide 3 or 4 recommendations for 3D printers. Don’t forget the importance of emerging economies. You have to mention 2 or 3 recommendations to say if it probable or visible. Pick 2or 3 strategies that they can apply use the Ansof matrix. Apply the SAF model in this question. For each recommendation you have to say if its visible or suitable or expectable. Introduction Given the strategical issues that 3D printers are currently facing, the proposed recommendations would be presented after noting that the goal is to further solidify the 3D Systems consumer strategy through product development efforts or investing in content and applications for the Cube (market development) (Lakhani and Lane, 2014). The objective is to determine which investment opportunity would immediately facilitate boosting of consumer business. Recommendations for 3D Printers With the goals that were clearly identified, the recommendations are as follows: Pursue market development first by partnering with sports and entertainment brands to allow Cube users to download and customize branded designs; To solicit regulatory guidelines to protect third party brand owners (specifically sports and entertainment brands) on copyright issues by negotiating agreements with them; Concurrently study the stages of product development to enable lowering the cost of 3D printers and allow improvement in product features: improved quality brought about by greater speed in printing, greater surface resolution, or lesser materials cost; and Evaluate the final pricing strategy to determine whether the $1,000 selling price could still be lowered to reach a wider range of clientele. Likewise, with product development, further options for diversification in emerging markets are potentially viable. Applications of Ansoff Matrix and SAF Model From the above-mentioned recommendations, the following courses of action, which are all probable, could be applied using the Ansoff matrix, as shown in the next page. The first move, a probable and visible move, is to delve into market development by forging alliances and negotiating agreements with third party sports and entertainment brand owners. This particular recommendation is suitable, acceptable, and feasible. It is suitable in terms of access to third-party brand owners who are already willing to forge agreements with 3D Systems to join on Cubify. It is acceptable since the level of risk is manageable and the stakeholders’ approval is deemed to favor expanding content and applications of the Cube with initially minimum resources (as opposed to immediate product development). As such, the recommendation is also feasible given that the current resources would be channelled to forging alliances with sports and entertainment brands, deemed to be an appealing and popular segment to expand this consumer business. Source: Strategic Options, 2014 The next move is to address legal concerns through negotating agreements with these third party brand owners to keep copyright issues in proper perspectives. The recommendation is suitable (to avoid legal cases and claims), acceptable (minimizes risks), and feasible (using legal resources to solve the urgent concern). This is also probable and visible. Finally, pursue product development to bring the price down, tap a wider clientele, and further expand (diversify) in emerging markets. The recommendation meets the SAF model criteria. The move is probable and later visible. It is suitable given that the next viable step is to improve on the 3D printers as to quality, features (speed and resolution), and price. It is also acceptable, since the immediate courses of action would already enable 3D Systems to gain greater market share and higher profits. From these resources, the funds could be channelled to product development where risk is minimize and returns are assured. Finally, the option is feasible given the expertise of 3D in research and development. Likewise, eventually, through the improvement of the product, as well as the appropriate minimization in offer price to the consumers, 3D Systems could offer the product to emerging markets (China, India, Russia, Brazil) (Accenture, 2008). In addition, the selection of the investment opportunity to pursue would depend on the amount of financial resources that 3D Systems is willing to invest immediately. With the option of partnering with third party sports and entertainment brand owners first, 3D would be capturing opportunities for generating financial profits from these alliances. As such, the funds generated would eventually be earmarked for product development and diversification in emerging markets. Likewise, the partnering move is less risky in terms of funds, time, and resources of the company that would initially be used; as contrasted to more money, time, resources, and efforts for product development. The diversification move, the last to be undertaken, necessitates market research, in conjunction with the product development. The emerging markets to pursue should be evaluated through extensive market research to determine viability, feasibility, and balancing risk and return outcomes. Conclusion In sum, the recommendations have effectively considered 3D Systems’ strategic position through the PEST analysis and Porter’s five forces model, the internal strengths, the strategic choices (Ansoff Matrix), as well as the SAF model (Strategic Choice: Johson and Scholes Suitability, Feasibility, and Acceptability Model 2010). Reference List Accenture. "The Rise of the Emerging Market Multinational." accenture.com. 2008.[Online] Available at: http://www.accenture.com/sitecollectiondocuments/pdf/mpw2.pdf [Accessed December 31, 2014]. Canalys. "3D printing market to grow to US$16.2 billion in 2018." canalys.com. March 31, 2014. [Online] Available at: http://www.canalys.com/newsroom/3d-printing-market-grow-us162-billion-2018 [Accessed December 31, 2014]. "Disruptive Technology." TechTarget. 2014. [Online] Available at: http://whatis.techtarget.com/definition/disruptive-technology [Accessed December 31, 2014]. Ehrlich, T., and E. Fu. "Our Future With 3D Printers: 7 Disrupted Industries." Forbes. October 29, 2013. [Online] Available at: http://www.forbes.com/sites/ehrlichfu/2013/10/29/our-future-with-3-d-printers-7-disrupted-industries/ [Accessed December 31, 2014]. Gilpin, L. "10 industries 3D printing will disrupt or decimate." TechRepublic. February 12, 2014. [Online] Available at: http://www.techrepublic.com/article/10-industries-3d-printing-will-disrupt-or-decimate/ [Accessed December 31, 2014]. Lakhani, K.R., and D. Lane. "3D Systems." Harvard Business School. 2014. [Online] Available at: file:///C:/Users/Lenovo/Downloads/1190040_9-614-0350%20(1).pdf [Accessed December 31, 2014]. Mintzberg, H., B. Ahlstrand, and J. Lampel. Strategy Safari. The Free Press, 2009. "PESTLE Analysis." Head in the Clouds Consultancy. n.d. [Online]. Available at: https://sites.google.com/site/headinthecloudsconsultancy/pestle-analysis [Accessed December 31, 2014]. "Resource Based View of the Firm." Value Based Management.net. 2014. [Online]. Available at: http://www.valuebasedmanagement.net/methods_barney_resource_based_view_firm.html [Accessed December 31, 2014]. "Strategic Choice: Johson and Scholes Suitability, Feasibility, and Acceptability Model." University of Westminster. 2010. [Online]. Available at: https://learning.westminster.ac.uk/bbcswebdav/pid-812401-dt-content-rid-2682156_1/courses/4MBS7A2.1.2014/learning_strategic_choice.pdf [Accessed December 31, 2014. Strategic Options. PowerPoint Presentation, Univesity of Westminster, 2014. Read More