Note: Sample below may appear distorted but all corresponding word document files contain proper formattingExcerpt from Term Paper:
For this reason, they have stepped out to pursue alternatives, especially foreign cars. On the contrary, as consumers become price oriented, they have minimal purchasing power because they are not buyers of large volume automobiles (Porter, 1985).
3.3 Threat of New Entrants
It is extremely difficult for new entrants penetrate the auto industry because of the existing high level of brand loyalty. Nevertheless, the few popular overseas firms and entered the American auto industry easily. For example, Honda Motors entered Ohio by opening a new office. This marked the beginning of a major stiff competition in the industry. Foreign entrants have expanded leading to decreased markets for American auto companies (Rubenstein, 2011).
3.4 Bargaining Power of Buyers
In the current marketplace, consumers have been given various options, models, and brands to make their selection. However, various factors affect the buying decisions of consumers. They include price, appearance, and effect on the environment. Customers are always seeking for nice looking and new cars. For the rich, car loving segment, they have a tendency of buying the most attractive and new released models. Besides this, another important issue is the quality of cars. A good car must be efficient meaning ensured safety, running fast and saving gas. Additionally, because the industry has many competitors, consumers enjoy a wide range of options at reasonable prices with good quality. Further, due to environmental factors such as global warming, most auto manufacturers are making their cars in a unique way that ensures the environment is protected. Looking at various consumer lifestyles, people are choosing to buy cars in different ways (Beecroft, 2008).
3.5 Threat of Substitutes
Up to this point, it is evident that companies have introduced many transportation substitutes. They include trains, buses, subways, and bicycles. Evidently, these substitutes have enhanced the lifestyles of most consumers living in urban areas. On the contrary, some people living far from cities have to use cars as the only means of transport.
3.6 Competitive Rivalry in the Industry
There is high competition between existing auto companies. This stems from the existence of too mush alternatives in the marketplace. For this reason, the auto industry has likely to realize reduced profits if the high cost of competition does not change.
4. 0 Conclusion
As much as the U.S. economy is slow, the automobile sector has been consistent in providing positive results in the past years. Over time, consumer confidence has been strengthening as car manufactures replace aging brands with innovative versions of models. Newer brands comprising of fantastic features in the market have made consumers to be non-resistant in replacing their old models with new ones. Moreover, there is a strong pent up demand such that thigh taxes and prices of gas have been unable to suppress consumers. Increasing market demand, which never existed in previous years, has become the backbone of the sales in the auto industry as both businesses and households are purchasing new models of vehicles (Yates, 2010).
Customers in this industry have been motivated by the ease of getting credit at a reduced interest rate. This has encouraged them to buy new cars following impressive specifications. Though the industry has cut down discounts, they have introduced minimal financial rates and lower lease installments, which have been effective at luring buyers to enter showrooms. The enormous demand for trendy cars accompanied by declining rates of unemployment and easy credit has been the driving force of the American auto sales. Experts expect that the pace of growth will stabilize becoming moderate in the future. This follows the pre-requisite of providing products with attractive specifications and great features to maintain competition and make use of the increasing demand, precisely as the outlook of European market remains dull (Rubenstein, 2011).
Beecroft, D. (2008). History of the American automobile industry. Toronto: CCH Canadian Limited.
Cooney, S., & Yacobucci, B.D. (2009). U.S. automotive industry: Policy overview and recent history. New York: Nova Science Publishers.
Porter, M.E. (1979) "How competitive forces shape strategy," Harvard Business Review, March/April 1979.
Porter, M.E. (1980) "Competitive Strategy," The Free Press, New York, 1980.
Porter, M.E. (1985) "Competitive Advantage," The Free Press, New York, 1985.
Rubenstein, J.M. (2011). Making and selling cars: Innovation and change in the U.S. automotive industry. Baltimore: Johns Hopkins University Press.
Weintraub, S., & Sands, C. (2008).…[continue]
"Porter's Five Forces In Auto" (2013, April 25) Retrieved October 21, 2016, from http://www.paperdue.com/essay/porter-five-forces-in-auto-87321
"Porter's Five Forces In Auto" 25 April 2013. Web.21 October. 2016. <http://www.paperdue.com/essay/porter-five-forces-in-auto-87321>
"Porter's Five Forces In Auto", 25 April 2013, Accessed.21 October. 2016, http://www.paperdue.com/essay/porter-five-forces-in-auto-87321
United States Automotive Industry and Porter's Five Forces Model American Automotive Industry United States Automotive Industry and Porter's Five Forces Model United States Automotive Industry and Porter's Five Forces Model The purpose of this report is to analyze and discuss the automotive industry of the United States in the light of Five Forces of Competition presented by Michael Porter. The report starts with an in-depth introduction to the U.S. automotive industry; including its profile,
4). 2.4 Effects of Environment: Concerns related to carbon emission were heightened in mid-2000s and in 2007 Al-Gore in his book 'An inconvenient Truth' condemned the big three saying "They keep trying to sell large, inefficient gas-guzzlers even though fewer and fewer people are buying them." In comparison to other developed countries in Europe and Asia, American standard for distance covered in one U.S. gallon was only 25 mpg (miles per gallon).
U.S. Automotive Industry Chosen industry: automotive industry is the focus of this analysis. More emphasizes are made on the large -- scale automobile manufacturers. This is because of the inherently interesting industry as a result it being competitive and projected to go through a major restructuring due to globalization in the near days to come. The issue of decreasing oil reserves is the other reason that is going to trigger this
The analysis of the weaknesses and threats are based on an analysis of the companies' filings with the Securities and Exchange Commission (SEC), specifically their annual reports, 10Qs and periodic filings of business activity. Table 2: While Foods SWOT Analysis Strengths: Continued revenue growth despite a challenging economy Well-executed growth strategy domestically in the U.S. And globally Strong growth in brand equity and value as a trusted advisor in organic foods Strength in acquiring and
Ford Motor Company's efforts to redefine strategies to address key strategic issues during the upcoming fiscal year. The essay also reviews Ford's business-level strategy, the company's value chain activities and identifies Ford positioning with respect to the five forces of competition. Ford's current business- level strategy was developed as a result of challenges the company has faced in the last decade. Ford saw their market share in the U.S. decline
This should allow Ford to innovate and make pricing decisions that are not directly replicated. Firms in monopolistic competition often behave like monopolies in the short run, something that Ford will need to do to improve its bottom line. Eventually any tactic Ford adopts will be mirrored by its competitors, but the increased competition allows for Ford to implement strategy and not receive a direct and immediate response from
Geico Current status Value Chain Marketing Operations & Service Five Forces Buyers New Entrants Intensity of Rivalry Competitive Advantage Data, service Size Stability, reach Brand Macroenvironment Political Social Technological Key assumptions Build Brand Invest in Technology GEICO began life in 1936 as the Government Employees Insurance Company (GEICO) but is better-known by its acronym. The company has always focused on the auto insurance industry. Today, GEICO is a wholly-owned subsidiary of Berkshire Hathaway. The original business model was to focus on government employees, but soon the company opened up to a