Will 3D printing revitalize strategic analysis?

It seems to me that in the last decades strategic analysis focused mainly on monitoring new entrants from low-cost countries, struggling with competitors and entering emerging countries’ markets.

Compared to Michael Porter’s model of five forces, the above takes care about two at best; Threat of new entrants and intensity of competitive rivalry.

Reminder of the five forces:

  • Threat of new entrants
  • Threat of substitute products or services
  • Bargaining power of customers (buyers)
  • Intensity of competitive rivalry
  • Bargaining power of suppliers

With the rise of additive manufacturing techniques, 3D printing being a flagship for them all, competitors in some businesses may have to reconsider the basics and the neglected forces.

Threat of substitute products or services

Among the neglected forces, the threat of substitute products or services comes to mind quickly. What have been manufactured in traditional way with several machining and assembly steps could be produced in one step with additive techniques, for cheaper* and in many cases faster.

*Cheaper remains questionable if considered in high volume. What seems obvious is the cost of manufacturing replacement parts in additive manufacturing vs traditional manufacturing. In the first case, parts can be printed in units when needed while in traditional manufacturing, parts would be produced in minimal batches, regardless the real demand. If the other parts of the batch aren’t sold, they’ll be total waste thus no saving with economies of scale.

The new techniques have to be mastered but do not seem so difficult to master to be barriers to entry. If they would, it would be irony to see a long established competitor locked out of his own business because he didn’t prepare for the substitute. A case not totally unlikely to happen.

The new techniques are/soon will be available to anyone, which means capital investment or access to these technologies are no barriers to entry either.

This brings us to next threats: threat of new (unexpected) entrants, bargaining power of suppliers and buyers.

Threat of new (unexpected) entrants

With the new techniques made easy and affordable (still taking 3D printing as example), literally anybody can establish him/herself as competitor. This could be former buyers, customers, enabled to manufacture themselves what they had to buy before. Many of them may not create a business, but as they are many, if a majority prints products or parts themselves instead of buying them, it can be enough to kill an established business.

Former buyers like distributors may be more serious potential new competitor as they may consider creating value from raw material instead of storing and distributing goods. Manufacturing with additive techniques will require few capital while distribution requires huge capital sitting in warehouse, carries over costs and all the risks.

These new competitors would no more (not only) provide a service by selling off-the-shelf, but manufacture-on-demand and possibly modify, improve or adapt the products.

Bargaining power of customers (buyers)

Former customers, now new competitors, like distributors could enforce their bargaining power as they will not be competitors for the whole product panel thus keep being customers, which in turn could enforce bargaining power of suppliers.

Bargaining power of suppliers

The first suppliers of substitute products will certainly have some bargaining power, yet their position will most likely be quickly challenged, revealed “blue oceans” being attractive to competition and barriers to entry not really existing.

Additive manufacturing will very probably disrupt many businesses, yet I do not believe everything can be provided cheaper and better (what ever better means) with 3D printers and the like. Mundane items of daily use, produced in very large batches may still continue to be manufactured the way they are.
In many cases, consumers will continue to trust genuine parts and original maker’s products. Therefore, in some trades and businesses where the choice will exist, traditional makers may regain some bargaining power when it comes to compare quality, safety, trust, reputation, esteem value, etc.

Will 3D printing revitalize strategic analysis?

Finally will 3D printing revitalize strategic analysis? I do think so. Threats will multiply as well as opportunities and new options in manufacturing require to broaden the scope of analysis.

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One thought on “Will 3D printing revitalize strategic analysis?

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