Cree, Inc.: Which Bright Future?

Abstract

When global warming concerns caused governments around the world to ban the incandescent lightbulb, many manufacturers began scrambling to produce products to fill the gap. Compact fluorescent lightbulbs, already on the market, seemed the obvious replacement. But light-emitting diodes (LEDs) were attracting attention as a more efficient alternative in lighting, steadily working their way up the value chain from winky-blinky applications into the now-flourishing backlighting market. Into this changing market entered Cree, Inc., a North Carolina-based LED chip and component manufacturer. This case explores whether Cree should pursue the LED monitor and television backlighting markets, or abandon them to focus on the potential "greenfield" market in general lighting.

Learning Objective: Enables a discussion around the strategic choice of scope and a calculation of the willingness to pay concept; facilitates a discussion of the strategic issues that are involved when a new technology substitutes for a traditional technology.