Even though paint provides certain positive aspects with regard to entrance costs and competition, growing costs and legislative elements make color a risky proposition for a new product to manufacture inside our excess plant space. Boundaries to entrance with regard to capital expenses and technology cost are comparatively low. The industry continues to be unconsolidated with numerous small manufacturers and possibilities in market markets. Nevertheless , despite individuals positive aspects, the industry has already been heavily controlled and this drivers of expense is expected to increase in the near future. Furthermore, raw materials costs are required to rise over the next five years narrowing profit margins. Low barriers to entry indicate low purchase costs
As shown in exhibit 1, equipment costs are fairly low intended for paint production when compared to different manufacturing sectors which spend over twenty percent of each money earned about capital tools expenses. More over, paint companies typically use less than 15% of each dollars earned upon equipment expenses, which is also lower than the whole economy normal. (3) The greatest expenses associated with paint manufacturing will be variable costs such as recycleables, which commonly account for more than half of total industry costs, and other expenses directly associated with the production process such as wages and waste disposal. This dynamic ensures that transitioning the surplus warehouse space would be comparatively cheap and much of the expenditure in manufacturing fresh paint would be limited to short term financial obligations from the expense of acquiring unprocessed trash. By nature, this arrangement could mitigate most of the potential risk from dealing with a new making venture. (2) Exhibit you
Markets possess room to get small manufacturers
There were over 835 specific manufacturers active in the industry through the 2012 money year, over 92% of which were small companies with fewer than 75 employees. Trends towards debt consolidation are present nonetheless they have been sluggish. (2)...