The Light Emitting Diode market as discussed above has great potential in terms of earnings and expected growth as mentioned earlier in the plan. The attractive potential of the Light Emitting Diode industry would motivate various companies to enter into the market and start competing with the existing companies. The entry of new competitors to an industry usually entails increased level of competition.
The existing companies in any industry would try to limit new entrants into the field to decrease competition and create monopolistic conditions. If the level of risk and threats in any industry are higher than the opportunities and returns then it would limit the number of new entrants in to the industry. The Light Emitting Diode industry is already highly competitive as various companies are already in the process of manufacturing Light Emitting Diodes. The proposed company Electro-Light will also be a new entrant in the industry. If new entrants keep entering into the Light Emitting Diode industry, the level of competition will keep increasing. There are various threats for new entrants in the field of Light Emitting Diodes. The Light Emitting Diode industry is a large one with major players existing in the market especially in China who have access to low cost raw material and labor and are able to deliver Light Emitting Diodes at very low prices. Another factor is the presence of established brands in the industry providing low price Light Emitting Diodes to consumers. The lack of technical expertise and experience in the manufacturing process of Light Emitting Diodes is also detrimental to new entrants and can be overcome by proper research and development. Another threat to new comers in this field is of low prices of Light Emitting Diodes currently being sold in the market due to availability of low cost raw material. Another threatening factor is poor and low access to distribution channels to manufacturing companies in poor strategic locations.
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