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    Automotive Sector Porters Analysis

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    Imran Khan
    The document analyzes Porter's five forces model for the automotive industry. It finds that: 1) The threat of new entrants is weak due to the huge investments required to enter the market and competition from existing manufacturers. 2) The bargaining power of suppliers is also weak as automakers can easily switch between suppliers who depend on the automakers for business. 3) However, the bargaining power of buyers is moderately strong, as large corporate and government buyers can negotiate prices, and consumers can easily switch brands for better prices or features. 4) The threat of substitutes is weak because personal vehicles provide convenience that alternatives like public transit do not. 5) Finally, competitive rivalry in the industry is very

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    Automotive Sector Porters Analysis

    Uploaded by

    Imran Khan
    66 views2 pages
    The document analyzes Porter's five forces model for the automotive industry. It finds that: 1) The threat of new entrants is weak due to the huge investments required to enter the market and competition from existing manufacturers. 2) The bargaining power of suppliers is also weak as automakers can easily switch between suppliers who depend on the automakers for business. 3) However, the bargaining power of buyers is moderately strong, as large corporate and government buyers can negotiate prices, and consumers can easily switch brands for better prices or features. 4) The threat of substitutes is weak because personal vehicles provide convenience that alternatives like public transit do not. 5) Finally, competitive rivalry in the industry is very

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    brief analysis of automotive industry in inida

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    Automotive sector porters analysis

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    The document analyzes Porter's five forces model for the automotive industry. It finds that: 1) The threat of new entrants is weak due to the huge investments required to enter the market and competition from existing manufacturers. 2) The bargaining power of suppliers is also weak as automakers can easily switch between suppliers who depend on the automakers for business. 3) However, the bargaining power of buyers is moderately strong, as large corporate and government buyers can negotiate prices, and consumers can easily switch brands for better prices or features. 4) The threat of substitutes is weak because personal vehicles provide convenience that alternatives like public transit do not. 5) Finally, competitive rivalry in the industry is very

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    66 views2 pages

    Automotive Sector Porters Analysis

    Uploaded by

    Imran Khan
    The document analyzes Porter's five forces model for the automotive industry. It finds that: 1) The threat of new entrants is weak due to the huge investments required to enter the market and competition from existing manufacturers. 2) The bargaining power of suppliers is also weak as automakers can easily switch between suppliers who depend on the automakers for business. 3) However, the bargaining power of buyers is moderately strong, as large corporate and government buyers can negotiate prices, and consumers can easily switch brands for better prices or features. 4) The threat of substitutes is weak because personal vehicles provide convenience that alternatives like public transit do not. 5) Finally, competitive rivalry in the industry is very

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    Porter’s five forces analysis of automotive sector

    The massive economic collapse has seriously damaged the revenue and profit of automobile
    manufacturers. Some of the most well-known products had come to the brink of extinction. If the
    government did not intervene, it would be very difficult for these products to survive. However, now
    that the recession has passed and things have returned, the automotive industry is thriving again. In
    addition to great technology and design, the focus is now on passenger safety and environmentally
    friendly. Soon, it will be time for autonomous vehicles. Several factors affect the automotive industry
    worldwide. Here is a five-power analysis of the automotive industry that addresses the five key
    strengths that affect its competitiveness and attractiveness in any market. This analytical model was
    developed by Michael E Porter and is widely used in the industry to keep track of competition and to
    build competitive advantage sources.

    Threat of new entrants: Weaknesses

    It is difficult for new products to enter the automotive industry which means that because of the huge
    investment required to develop the automobile product. In the first phase, significant investment will be
    required to set up production centers, distribution network, and hire skilled staff. Another major
    obstacle is the level of competition from existing products. Unless a new product brings a clever product
    to the market, the chances of gaining significant market share are low. While the law was not a barrier
    for new entrants before, legal requirements have grown in recent years, creating one barrier to entry.
    Product and celebrity photos can also be major challenges for new players. Product photos and equity
    are some of the biggest benefits of existing products. Any new model will need to focus more on
    engineering and product quality. Gaining access to immature items can be easy but achieving economies
    of scale is difficult for younger players. Plus, getting into new markets isn't easy either. Some
    governments have used high import taxes to discourage exports. Therefore, several factors reduce the
    threat from new players. Except for Tesla, no new model has been able to make a significant mark on
    the global footprint in the automotive industry.

    Bargaining power of suppliers: Weak

    The bargaining power of suppliers in the automotive industry is not strong-most of them are young
    players. Only a few are important in size. The threat of overweight is from suppliers for the reasons
    discussed in the first paragraph. Suppliers must play according to the rules set by the automotive
    industry. Automotive brands such as BMW, Ford, Toyota, and VW capture the big picture because raw
    materials are always available in bulk and moving from one supplier to another is not difficult for them.
    In this way, the bargaining power of suppliers is very low.

    Bargaining power of buyers: moderately strong

    A large portion of the buyers is small buyers who buy one car. However, there are companies and
    government agencies that buy cars. Such buyers are in a position to negotiate a lower price. Whether
    small or large consumers can easily adapt to a new breed. There is no significant cost involved in
    switching to another type or alternative of travel. Consumers are more sensitive to the price and can
    switch to another brand that offers a better product at a lower price. However, none of the buyers even
    if big companies or small buyers risk getting merged back. Based on the whole picture their ability to
    communicate is strong with modesty. Products are focused on building customer loyalty through design,
    quality, and by offering competitive prices. Competition in the automobile industry has grown intense
    and changing consumer trends have also led to growth in the bargaining power of customers.

    Threat to substitutes: Weak

    There are a few ways to switch to other modes of transportation including taxis, buses, trains, and
    airports. However, none of them can provide the kind of accessibility and convenience that the car gets.
    Your car will work for you day and night but if you missed the train or bus you have to wait for another
    one. However, in case you are looking for alternatives you do not need to worry about repairs. Still,
    owning a car is a simple matter and the honor of many. Therefore, the threat of replacement is dimmed.
    Also, there is a specific threat from substitute products that daily commuters can find cheap and easy to
    take on a train or bus.

    Competitive rivalry in the industry: very strong

    The number of recognized and influential products is low and the barriers to exit are very high. Any
    product trying to get out will have to lose a lot. The level of customer trust is high and while the industry
    is large, it is mature. This strengthens the market share competition. However, different types of
    products show different market segments and yet they overlap. Products compete based on price,
    composition, quality, technology, customer safety, and a few other points. Overall, the competition in
    the automotive industry is either more powerful or rather more powerful. Automation firms invest
    heavily in research and development, digital transformation, and marketing as well as overall customer
    experience to increase sales and customer base. Whether it is in the premium segment or a small
    segment of the car and SUVs, the level of competition among leading brands is strong. With high
    competition, the brand strives to increase customer satisfaction and compete to provide the best
    customer experience. They are also investing in expanding their sales and distribution network and are
    focusing on the back of high-quality sales service now.

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