Five forces framework to explain the industry performance 1 weak to 5 strong 1. supplier – parts supplier have 2. potential entrants – threats of new entrants is medium-high 4. for new entrants, newly created automobile manufacturer is unlikely. However, new product line and selection is inevitable. i.
e. new model Acura TSX to compete with semi-luxury automobile. 3. buyer – bargaining power of buyer is high 5. The customer has many selection of automobile to choose from. In addition to the automobile, customer can choose many dealer to bargain the purchase price.
4. substitutes – threats of substitutes is high 5. customer can choose other similar vehicle as an alternative for its purchase decision. 5. company – rivalry among existing firms is medium 3. even with six major automobile manufacturer in this industry.
There are still many competition and rivalry between and among the company. i. e. Honda is competing with Toyota; Pontiac can be competing with Chevrolet. The sources of competitive advantage in this industry is the potential entrants. Automobile manufacturer can position them as the leader by launching new product that attract customer to gain market share.
This force is the most valuable of the five forces framework. The other two minor forces that can be use as a competitive advantage is less power of the supplier and low rivalry among the company. With the low power of supplier, the automobile manufacturer can forecast its supply cost and quality. With low rivalry among existing firms, company can focus on certain most profitable division such as Ford cars / trucks account for majority of profit and sales for Ford. In addition to focusing on certain automobile division, the other alternative is form joint-venture with other automobile manufacturer to produce new, high quality and economical automobile.
What is Porter’s 5 Forces analysis? What are the main aspects of Porter’s 5 Forces analysis? How to write Good Porter’s 5 Forces analysis of a company? Where to find information for Porter’s 5 Forces analysis? Porter’s Five Forces Examples; Reports on Different Companies Introduction There is continuing interest in the study of the forces that impact on an ...