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Chinese Fireworks Industry Revised Case Solution
When Jerry Yu celebrated Chinese New Year in Liuyang, the city of firecrackers and fireworks, in 2009, he was so awed by the displays that a local hamlet asked him to invest in their fireworks business. Data and research show that fireworks sales in China and Liuyang are on the upswing, despite certain obstacles. We advise Jerry to put money into the fireworks business in Liuyang because we see it as a promising sector of the economy. Here we'll go through the precise justifications, marketing plans, and recommendations. From 2007 to 2009, the Chinese fireworks market expanded at a steady rate. The International Fireworks Association estimates that the Chinese fireworks market is now worth $1,683 million, up from $1,237 million in 2013. The local market and international market have developed at almost the same rate. Overseas sales increased from $494 million to $673 million, while domestic sales grew from $742 million to $1,009 million. In that time, each market has expanded by around 36%.
Following questions are answered in this case study solution:
What are the defining business and economic characteristics of the Chinese fireworks industry? What is this industry like?
What is competition like in the Chinese fireworks industry? Which of the five competitive forces has what impact or strength? What overall effect do the five competitive forces seem to have on industry attractiveness and profitability?
How is the Chinese fireworks industry changing? What are the underlying drivers of change and how might those driving forces change competition in the industry?
What key factors determine the success of fireworks manufacturers?
Is this an attractive business to be in?
Case Study Questions Answers
1. What are the defining business and economic characteristics of the Chinese fireworks industry? What is this industry like?
The pyrotechnics produced by the Liuyang Fireworks Industry is widely regarded as the finest in China. They produce fireworks that stand out from the rest of the pack because of their wide range of options, unique designs, and high quality in terms of colour, shape, brightness, and sound. Because the market for fireworks is already sizable and continuing to expand worldwide, he should invest his money into creating fireworks because he stands to make great profits from doing so. The market for fireworks is present all over the world. Because of its high quality, the product sold by the company is in high demand, which makes it more marketable than those sold by competitors. In addition, the company can use economies of scale, readily accessible technology and raw resources, and other factors to keep production costs low and maximise profits.
Devices that are either flammable or explosive and meant to produce a visual or audible impact are called fireworks. The Chinese fireworks industry is widely known worldwide as a producer and exporter of pyrotechnics. This reputation has helped the industry achieve widespread success. The manufacturing process calls for several components, including charcoal, potassium nitrate, and sulphur, amongst others. When it was initially lighted, the material burned swiftly and in a rather quiet manner. Over time, those who work in the fireworks industry came up with a new method, which entails burning the powder at the tip of the projectile to launch it out of the barrel. As a modern substitute for black powder in the function of a propellant, smokeless powder is often used. However, black power is the most important component in pyrotechnics because it can function both as a bursting charge and a fuel.
2. What is the competition like in the Chinese fireworks industry? Which of the five competitive forces has what impact or strength? What overall effect do the five competitive forces seem to have on industry attractiveness and profitability?
By using industry analysis, the company can better utilise the vast market it has access to because its products are in high demand and of high quality, and because economies of scale and ready access to technology and raw materials keep manufacturing costs low and profit margins high. Before monetizing the output, there are a few things to remember.
Other businesses that provide similar goods are considered competitors.
Substitutes are items that may be used in place of the one being produced since they provide the same function.
Buyer power refers to a consumer's willingness to acquire a product made by a company.
Considering the considerations, the company is in a good position since it offers a wide range of items that satisfy the needs of its clients, from the sale of low-priced products to high-priced products that serve various purposes. Since the fireworks business in Liuyang, China, has benefited from economies of scale, it has been able to corner a significant portion of the Chinese market in recent years.
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