HomeRoots Pitch Deck | Investor Insights | April 2024
Cree Case
1. CREE INC.
CASE REVIEW
EBM 635
Presented to: Prof- Ashok Kaka
• HIMOSH SHARMA
• SHIRISH SHARMA
2. INTRODUCTION CREE. INC
Starting of twenty-first many country efforts to curb global
warming by improving energy efficiency targeted lightening.
Which alone consumed 19% of global electricity
production.
In 2007, the U.S. passed a law that would ban the most
inefficient incandescent through an extended phase out.
The manufacture and import of 40 and 60 watt bulbs
prohibited from January 2014.
3. INTRODUCT ION…
In mid of 1990’s CFL bulb were sold in the U.S.
Later one- third the energy of incandescent bulb, were
seen as the obvious replacement.
Also some industry insiders began touting light-emitting
diodes (LEDs) as the next generation of lightning.
4. LEDS INTRODUCED-
1 9 6 0 ’ S
Light emitting diodes were introduced commercially in the
1960s as low-power red indicator lights.
By 2007, LEDs were available in a full range of colors,
including white, and could generate light at high outputs.
LED backlighting for LCD TVs was quickly catching on,
and expected to grow quickly to $7 billion by 2013.
5. CREE INC. MAJOR PLAYER
Major player in the developing LED market market was
Cree,Inc.,
It is a Durham, North Carolina-based LED chip and
component manufacturer.
Accordingly from its IPO in 1993 to 2006, Cree’s annual
revenues grew from $6.3 million to$423 million.
6. CREE INC. MAJOR
PLAYER. .
Total employees were 2500 of the company, and earned most
of its revenue by selling LED “Chips” and components to
business.
Also Cree’s customer used to packaged and re-sold its LED
chips and components in various applications, including mobile
phone, keypads, TVs.
By 2006, however, Cree’s net income had started to decline;
and annual revenue decreased for the first time in the
company’s history in 2007.
7. PROBLEM
Should CREE continue to make LED Backlighting Market
for monitors and TV screens?
Withdraw from their current strategy to pursue new
opportunities ?
Should they do both?
8.
9. LED LIGHTING MARKET
GENRAL LIGHT- 7%
MOBILE APPLIANCES- 44%
SIGNS AND DISPLAYS- 17%
AUTOMOTIVE- 15%
OTHER- 17%
11. MARKET SUBSTITUTES
CFL is the available and the biggest substitute
Technological enhancement can bring in a new market in
the lighting industry
12. NEW ENTRANTS
As the market grows, new entrants is not an unknown
Since the establishment, Cree has been dealing with new entries
Cree has strengths to overcome entrants because:
Subsequent patents
E. O Scale and low cost leadership
Market Reputation
Good Value of the product:
13. 3 MAJOR STEPS
To add value to the product
Differentiate Product
Cost leadership
Finishing and looks
14. FUTURE OUTLOOK
GENERAL LIGHTING
Total Market Size in 2007: $110Billion
Costs at LED’s Market In General Lighting were
expected to drop 70% by 2015
Offer to Initiate the first LED City
LED lighting markets are processed to achieve
high growth as the market leads on using cost
efficient LEDs
15. INTERNAL SCENARIO
HUMAN RESOURCES
Skilled Labor
Open Minded Management
No MBA’s
INNOVATION
Unstructured
Creative Problem Solving
20. CREE’S STRATEGIES
Business-Level Strategies:
Integrated Cost-Leadership Differentiation
o Cree seeks to provide a superior quality good at
competitive prices.
o By taking advantage of E.O Scale in input logistics and
centralizing R&D with continuous innovation.
21. RECOMMENDATIONS
CREE SHOULD PURSUE BOTH MARKETS
Backlighting: Utilizing Cost-Leadership Management
Strategy
LED General Lighting: Differentiation Management
Strategy
22. MANAGING
LEADERSHIP
• Make a significant investment in capital assets
• Innovate designs for a shorter assembly line
• Retain Experience and Skills of the organization
• ERP management and control over the supply and
distribution chain.
23. COST LEADERSHIP
Production outsource/ cheaper cost geography
B2B promotion to cut down middle man
Online distribution and sales could be a cheaper selling
platform
Constant R&D for Low cost product innovation
