Porter's Five Forces In The Automobile Industry

Bargaining Power of Suppliers: The bargaining power of suppliers in the industry is low. There are numerous suppliers in this industry, and the large department stores have the ability to negotiate for the lowest prices. In addition, the switching costs are low, as the products are not highly differentiated. There are a large volume of purchases in the industry, allowing the department stores to exert even more power over the suppliers.

The automotive industry designs, develops, manufactures, markets and sells motor vehicles, and is one of the world’s most important economic divisions by profits. This analysis focuses on the industry, specifically, manufacturers of automobiles. There are five competitors in the StratSim environment: Firm A, B, C, D, and E. Industry sales in the most recent year were 4.3 million units, with expected growth in the next year. Within this industry, there are seven-vehicle classes: Economy, Family, Luxury, Sports, Minivan, Truck, and Utility. There are two new classes with potential – if properly marketed.

In the Automobile industry, many companies need to strive to make better and affordable cars. The automobile industry is concerned with profits and competition, consumer demands for styling, safety, and efficiency and it is also involved with labor relations and manufacturing efficiency. For example, in 2007, more than 73 million motor vehicles, including cars and commercial vehicles were produced worldwide. In 2007, a total of 71.9 million new automobiles were sold worldwide: 22.9 million in Europe, 21.4 million in Asia-Pacific, 19.4 million in North America, 4.4 million in Latin America, 2.4 million in the Middle East and 1.4 million in Africa. The markets in North America and Japan were stagnant, while those in South America and Asia grew strongly. Of the major markets, Russia, Brazil and China saw the most rapid growth. In 2008, with rapidly rising oil prices, industries such as the automotive industry are experiencing a combination of pricing pressures from raw material costs and changes in consumer buying habits. The industry is also facing increasing external

With the recovery of economy, the world’s automobile industry has been growing steadily over the past few years. According to Bloomberg, the US automobile sales climbed from its depth 10.4 million in 2009 to over 15.6 million in 2013. Furthermore, industry analysts predict that the sales will

Bargaining power of suppliers: A producing industry requires raw materials & other supplies to carry on their production. When the suppliers are few and buyers are more, when products or services are not freely available, when substitutes are not easily available in that situation the bargaining power of suppliers is high.

Competitive analysis main objective is to research, analyze, and compare the competition in relation to the company. Analytical tools used for competitive analysis include the five forces framework, value net, driving forces, strategic groups, competitor analysis, and key success factors are analytical tools. The competitive analysis will enable the trucking company to understand more about the industry and the competition, to be able to develop a competitive strategy that will give the company a competitive advantage by taking into account the actions and responses of the competitions (Thompson, Peteraf, Gamble & Strickland, 2016).

Michael Porter identified five forces that influence an industry. These forces are: (1) degree of rivalry; (2) threat of substitutes; (3) barriers to entry; (4) buyer power; and (5) supplier power. For more on this framework proposed by Porter, please see Appendix C. Like other industries operating under free market, capitalistic systems, viewing the automotive industry through the lens of Porter’s Five Forces can be helpful in understanding the forces at play.

Bargaining Power of Suppliers — Moderate. As the suppliers are the main players in the market, they are able to negotiate favorable terms and conditions for their products. The supplier’s brand loyalty helps with leverage, as these products are one of a kind in this type of market.

The automotive industry is at the forefront of technological innovation. Automobiles have advanced from basic transportation devices into fully integrated machines. Advancements in hybrid, alternative fuel, and electric

The US automobile manufacturing industry includes about 200 companies with combined annual revenue of about $250 billion. Major companies are GM, Ford, and Chrysler (which is controlled by Italy 's Fiat). The industry is highly concentrated: the top three companies account for more than 90 percent of revenue.

Bargaining power of suppliers. Suppliers have the ability to leverage, control, and negotiate the cost of their products (Hill et al., 2015, p. 56). In the case of the suppliers of the office supplies industry, more so for Staples, the bargaining power is weak and is considered to be low. The reason for its power being weak is a result of large companies having several suppliers that will easily compete against each other to provide the lowest cost of products.

The American automotive industry is one of the largest parts of the national economy. In 2009 it made up 6.6% of the entire American workforce, employing 880,000 individuals.

- Suppliers’ bargaining power: The company does bargains with the suppliers, suppliers are first carefully selected by carrying out bidding then a fixed price is set by multi consent then material is provided by the supplier.

The US Auto industry is facing the reality that new generations are not the same generations on which they built their empires. As information and global awareness are more prevalent than ever before, the consumer only wants to do what feels right to them, not what they have been told to want, and statistic show that the things the new consumer is looking for above all, is the lower cost of owning a car, followed fuel efficiency and how environmentally friendly it is.

the automotive industry has continued to evolve, with the change in lifestyle, and the demand of ease of transportation has allowed the industry to far surpass its competitors, and the industry continues to rapidly evolve for future generations.