Paint Allied Essay

Submitted By helena1980
Words: 2094
Pages: 9
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INDUSTRY ANALYSIS PAPER:

______Paint and allied products______

As a group member, I hereby certify and warrant:
(a) this paper is our original group work;
(b) we have acknowledged all the sources used in this Paper. We understand that copying of another’s work and representing it as our own work is a serious academic offense, and should be treated as such;
(c) the final version of this paper has been read and approved by all group members in the form it has been submitted to the Instructor.

1. Table of Contents

II. Executive summary
III. Introduction
IV. Market Structure
V. Industry Demand
VI. Cost Structure
VII. Analysis of Competitive Forces
VIII. Conclusion
IX. References
X. Appendices
II. Executive Summary
III. Introduction
IV Market Structure
A. How the structure of the industry best be characterized: perfect competition, monopolistic competition, oligopoly or monopoly? Briefly go over the martket characteristics to confirm your definition here.
The market structure of the paint industry has changed dramatically over the past century. Paint producers once numbered in the thousands in the U.S., have now been reduced to hundreds with the remaining small numbers showing dominance in the market. One factor resulting in this reduction was an increase in globalization. Globalization in this industry has forced the commitment to reduce costs to serve markets outside of their regional markets. Another factor that led to fewer numbers was consumer demand for less expensive and higher quality paints. Many of these companies could not compete without the latest technology and went out of business with many being acquired by the remaining businesses resulting in an increase in their market share. “Since 1990, 13 of the leading 40 paint companies have been acquired or have gone out of business. As a result, the ten largest firms accounted for 51% of the global revenues in 2004 compared to 37 percent in 1999.” – The TiO2 Value Chain
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Paint manufacturers are typically less exposed to low cost foreign imports compared to other industries. For the most part, their distribution networks are regional as the transportation costs of high density liquids are not conducive to exporting.
The industrial paint segment of the market is driven by advanced technical advantages such as UV resistance, potable water contact approval, and high corrosion resistance. These features tend to differentiate the main competition from the bulk of the standard paint market essentially establishing niche markets with greater profits than the consumer paint market.
These conditions clearly define the paint industry as an oligopoly. This is a market where the majority of the sales are placed on a handful of large manufacturers. While it may not be difficult to enter the paint market, it is difficult to remain in the market without a substantial investment in technology to reduce overhead and labor costs. In addition, in industrial paint market, competitors are quite aware of the benefits and advanced features of each other and can drive market prices up.
The key points of the paint industries market structure are: • Market dominated by a small number of sellers

• Barriers to market entry are high

• Interdependence – each seller is aware of its and its competitors effect on the market

B. How many major firms (up to top four if applicable) are there in the industry and what is their market share? A table showing the market shares is required here.

V. Industry Demand
What are the key determinants of the market demand? Describe the current change in the determinants that caused the demand change.
The majority paint and allied products demands are keyed into two different sections of the economy. By 2015, the demand in the US is expected to exceed $25 billion. In 2005, 40 % of the paint revenue was from the architectural segment and 27% from the
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