3D Printing and Porter’s five forces – opportunities

In a previous post on this topic I highlighted the threats of 3D printing – as symbol of any additive manufacturing technology – disrupting traditional businesses, wondering if threatened business owners and professionals are aware of it. In this post I’ll take the opposite point of view, as a challenger to established businesses, breaking the rules with the help of new manufacturing techniques.

With these new techniques and new printable materials, virtually anyone can become a manufacturer, almost overnight. Reconsidering Michael Porter’s five forces model for industry analysis and business strategy development from the point of view of a potential new entrant, the analysis could go like this:

Threat of new entrants

Chris HOHMANN

Author: Chris HOHMANN

The new entrant will threat established businesses by disrupting the way business is done, for instance the offer itself, the prices, customization and speed of delivery. Enter business is easy with new technologies breaking former barriers to entry. 3D printers are not very capital intensive assets.
As a reaction, threatened competitors can lobby to harden regulations and keep new entrants out or limited to niches, trying to raise new barriers. But this is more likely a local strategy as a global world-wide consensus to ban new tech or protect businesses is hard to imagine.
Once in business, the challenger will probably meet others having similar objectives and aggressive offerings. The challenger should therefore fear other new entrants. This leads us to intensity of competitive rivalry.

Intensity of competitive rivalry

New opportunities will probably attract many challengers, especially in dull economies, fuelling competitive rivalry.
Competitors in place may adapt and switch themselves to new technologies. In some cases, their former experience and/or customer base is a real advantage compared to new entrants.

On the other hand, established businesses may still use old capital intensive assets or equipment not yet free from amortization. In many cases this could be a (bad?) reason for them to stick to old ways.

Finally, customers themselves may enter the competition by manufacturing for themselves, turning into competitors of sorts. They may have personal 3D printers or go to a 3D print shop or the next fablab. Customers will probably not 3D print on large scale and setup a business, but doing themselves for family and friends they reduce sales opportunities. This threat should not be underestimated as a lot of small individual players can “capture” a significant market share.

Threat of substitute products or services

Additive manufacturing is relatively new. 3D printing in various materials may see further progress and innovation, allowing new applications, new products and services to emerge. At the actual pace of innovation, hard to say if it will go on or mature as it is. Would I be a challenger or an established business owner, I would keep active watching what may come anyway!

Bargaining power of customers (buyers)

Each time the offer exceeds the demand, the power goes to customers. With the relative ease to establish as a manufacturer, service provider, etc. the number of competitors should increase and their rivalry thus giving more choice, hence bargaining power to customers.

Bargaining power of suppliers

For equipment and raw material suppliers, the trend could go opposite: from few suppliers at the beginning, their number may increase. One can imagine the 3D printing following inkjet printing model: low cost or even free printers but relatively expensive (read profitable) material, just like ink cartridges (or some coffee capsules).

If the printing material becomes a convenience, the number of suppliers may decrease again because of limited profit. The last survivors will regain some power concentrating the supplies on fewer actors.

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