***PROJECT 1 IS IN THE ATTACHMENT*** Competency In this second part of the four-part project series, you will demonstrate your mastery of the following competency: Analyze quantitative and qualitati
Project One: Executive Summary
Bobby Ngendung
Southern New Hampshire University
BUS 225: Critical Business Skills for Success
Lamarr Cook
May 23, 2026
Project One: Executive Summary
Description of the Problem
Our engine manufacturing company needs to diversify because we only supply engines to the automotive industry, putting our long-term financial sustainability at risk due to single‑market exposure. Engine manufacturers face long-term market contraction as the automotive industry shifts toward zero‑emission powertrains and electric vehicles. Seasonal consumer demand and unstable economic conditions also create unpredictable revenue fluctuations. Our goal is to identify another industry where we can use our expertise in creating strong, long-lasting engines to protect resources and ensure long‑term profitability. We want to create new revenue streams, avoid the risks of relying only on the car industry, and make the most of our existing equipment and factories.
To diversify, we must analyze quantitative and qualitative data from the automotive and agricultural equipment industries. Quantitative data includes revenue, sales growth, market share, manufacturing costs, profit margins, and demand sources. For example, declining car sales and increasing taxes support diversification, while agricultural industry revenue and projected growth point to future opportunities. Qualitative data includes customer preferences, new technologies, competitor strategies, and government regulations. Examples include demand for self-driving tractors, fuel‑efficient machines, precision farming technology, and environmentally friendly equipment. Analyzing customer opinions, competitor innovations, and industry challenges helps assess long‑term suitability for agricultural engine manufacturing.
Description of the Current U.S. Automotive Industry
The car manufacturing industry is stable but faces tariffs, shifting client tastes, and varying demand. Light vehicle sales are expected to reach 16.1 million in 2025 and 16.3 million in 2026 (BMI, 2025). Automobile manufacturing may fall in 2025 before improving as firms bring more production back to the U.S. The Midwest and South lead in truck and commercial vehicle demand, while state incentives increase demand for electrified and high‑end vehicles on the West Coast and Northeast.
Electric car sales may decline due to reduced tax benefits and increased tariffs, while hybrid cars grow in popularity. EV sales are expected to fall by 32.1% in 2026, dropping to 1.0 million units and a 6.1% market share (BMI, 2025). PHEVs are predicted to account for 25% of light EV sales in 2025 and remain popular until 2028, meaning regular gas engines with hybrid technology will remain important (BMI, 2025). Customers prefer reliable, fuel‑efficient vehicles with new technology and favor SUVs and trucks over sedans.
Current Automotive Market Trends
The U.S. car industry is changing due to electric vehicles, consumer preferences, and new in‑car technology. Electric and hybrid vehicles are growing because of government support and environmental concerns (U.S. EPA, 2025). SUVs and trucks remain dominant, making up over 75% of sales (Automotive News, 2023). Sedans continue to decline as consumers prefer the space and usefulness of larger vehicles (U.S. EPA, 2025).
Consumers are price‑conscious but willing to pay more for safety features like automated braking and lane assist. White, grey, and black remain popular colors, though younger buyers prefer brighter options. Technologies such as adaptive cruise control, entertainment systems, and software upgrades are becoming necessities, requiring manufacturers to balance EV production costs with affordability (Autodesk, 2024). To stay competitive, automakers must innovate without making vehicles excessively expensive.
Description of the New Industry
The agricultural equipment industry is performing fairly well and offers long‑term growth opportunities. It generates around $39.7 billion and is projected to grow 1.2% annually until 2031 due to stable crop prices, global food demand, and new technologies like precision farming, automation, and eco‑friendly machines. Labor shortages and changing weather increase demand for advanced equipment. However, high interest rates, fluctuating crop prices, and supply chain issues affect farmer spending.
Major companies like John Deere, AGCO, Kubota, and CNH Industrial dominate the sector through large‑scale production, financing options, and investment in precision and self‑driving machinery. Despite being crowded, the industry remains appealing due to technological focus and global expansion opportunities. Revenue has declined by 5.8% annually since 2021 due to lower farmer income and higher borrowing costs (IBISWorld, 2026). Large tractor sales fell up to 20% in late 2025, while lawn and garden equipment (18.4% of the market) remained stable. The Plains region leads sales, with Iowa generating $7.65 billion, or 19.3% of total revenue (IBISWorld, 2026).
The industry is expected to recover, reaching $42.2 billion by 2031. Barriers to entry remain high due to EPA emissions regulations, large capital requirements, and strong brand loyalty (IBISWorld, 2026). Programs like EQIP and REAP support electric and hybrid farm equipment, creating new opportunities.
Current Market Trends in the New Industry
The agricultural equipment market is changing due to technology and sustainability. Farmers increasingly use GPS tractors, self‑driving vehicles, smart sensors, and AI systems to address labor shortages. Federal programs promoting eco‑friendly machinery increase demand for electric and hybrid engines. Customers want equipment that reduces costs, integrates with digital systems, and provides performance data.
Farmers are more cost‑conscious due to fluctuating crop prices and rising expenses. They prefer technology that maximizes yields while reducing fuel, seed, and chemical use. Labor shortages increase demand for automation. Customers also want flexible financing options. Precision agriculture, autonomous equipment, and sustainable power are now priorities. Farmers need engines with advanced diagnostics and are willing to pay more for hybrid‑electric and eco‑friendly engines.
Threat of New Entrants
New Industry
Diversifying into the agricultural equipment sector is a little challenging. It is expensive, the big corporations already have a solid advantage, and there are numerous regulations and technical obstacles to overcome. According to IBISWorld (2026), it is difficult to enter this sector since companies require plenty of money and the industry is dominated by large, well-known manufacturers.
Abiding by federal regulations also makes it tough to get started. The industry has many regulations (IBISWorld, 2026, p. 4), including safety rules, emission standards, and financing laws that require special knowledge and expensive certifications.
In order to compete with Deere & Co. and CNH, new companies must invest heavily in innovative factories, engineering, and research. According to the survey, smaller firms face challenges since they lack the funds to invest in new technology. This would make it considerably more difficult for new enterprises to succeed in this industry.
Very few new businesses are prepared to compete since the market is dominated by large, sophisticated enterprises with extensive dealer networks. Manufacturers are investing more in self-driving technology and "precision agriculture features" making it more difficult for new businesses to compete (IBISWorld, 2026).
Automotive Industry
Entering the automotive engine manufacturing industry is quite challenging because of significant structural, financial, and regulatory obstacles. According to a Fitch Solutions report, the U.S. auto market is well-established and saturated, with high production costs that make it hard for new companies to compete (BMI, 2025).
New companies must deal with large capital demands for engine design, testing, tooling, and meeting strict U.S. safety and emission standards. The report also points out that tariffs on imported parts and vehicles raise expenses and create administrative difficulties, which further discourages new competition (BMI, 2025).
Moreover, current automakers have well-developed supply networks, a skilled workforce, and large production facilities. These are advantages that are hard for new companies to duplicate. Since most major automakers produce their own engines, there are few opportunities for new engine suppliers.
Consequently, only a few companies are realistically in a position to enter the market, keeping the overall threat from new entrants very low.
Threat of Substitute Products
New Industry
Substitutes provide a moderate threat to the agricultural equipment industry since farmers can purchase used equipment, alternative machinery, or newer technology rather than new traditional equipment. GPS systems, sensors, precision agriculture tools, and self-driving machines are changing agriculture by increasing productivity and efficiency without replacing all of the equipment. While tractors, combines, and harvesters are still necessary, more advanced technologies are gradually replacing older and less efficient equipment.
A good number of farmers frequently choose less expensive, pre-owned machinery over new versions, used agricultural equipment plays a significant role in the business. This preference can reduce the demand for new equipment and potentially limit manufacturers' profits.
Smaller machines, such as two -wheel tractors and compact equipment are also alternatives for small farms and in new markets (IBISWorld, 2026). Due to its affordability and suitability for small farms, smaller-scale machines are valued more in emerging global markets. These products aren't direct replacements for large U.S. machines, but they show that there's a global trend toward cheaper options.
I believe substitutes are unlikely to drive our company out of the market, but they do reduce price power and shorten replacement cycles.
Automotive Industry
The threat of substitute products in the auto industry is moderate but growing, due to fast technological changes and shifting consumer tastes. Electric vehicles (EVs), plug-in hybrids (PHEVs), and self-driving ride-sharing services are becoming strong alternatives to traditional gasoline-powered cars (BMI, 2025). Even though EV demand is showing signs of slowing down because of the removal of the EV tax credit and higher tariffs, these technologies still represent long-term substitutes that could change the market.
Self-driving vehicles (AVs) are also becoming more popular, with Companies like Waymo, Tesla and Zoox expanding in major U.S. cities (BMI, 2025). These services could decrease the need for personal car ownership, thereby putting indirect pressure on traditional automakers.While EVs and AVs aren't necessarily cheaper to manufacture, battery costs and supply chain difficulties remain significant. Their advantages in fuel efficiency, cheap maintenance, and innovative technology make them appealing choices. Eventually, these substitutes may reduce demand for traditional engines, but they are unlikely to drive established engine makers out of the market very soon.
Bargaining Power of Buyers
New Industry
Buyer power in the agricultural equipment industry is high because the customer base is very diverse, including individual farmers, extensive farming enterprises, agricultural contractors, and commercial landscaping firms. Despite the large number of customers, they are all significantly impacted by similar economic conditions like crop prices, fuel costs, and interest rates. Given the high cost of agricultural machinery, buyers are very conscious of price and frequently compare brands, financing options, and long-term operational costs before making a purchase ((IBISWorld, 2026).
Due to their large-scale purchases, commercial purchasers and large farming operations can put a lot of pressure on manufacturers to lower prices or improve financing terms. Additionally, purchasers can improve their negotiation position by delaying purchases when agricultural revenues are low (IBISWorld, 2026). Because consumers can choose less expensive used machinery over new equipment, the strong pre-owned equipment market also increases buyer power. As a result, in order to maintain sales and market share, manufacturers must compete on price, financing alternatives, technology, and customer service.
Automotive Industry
Buyers in the U.S. car industry have a lot of power because they have many options and are really price conscious. According to a Fitch Solutions report, higher tariffs on imported cars and parts will likely cause car prices to increase in 2026, which could reduce how many people want to buy cars and make them more sensitive to prices (BMI, 2025). If prices go up, buyers can easily choose other brands, wait to buy, or buy used cars instead, the report says that used cars are becoming a bigger threat to new car sales (BMI, 2025).
Because millions of people buy automobiles each year, no single consumer holds substantial authority. Buyers, on the other hand, have significant leverage since manufacturers must respond to fluctuations in customer demand, especially when economic conditions or policy changes, such as the termination of the EV tax credit, cause buyers' preferences to shift. The study observes that EV demand fell dramatically after the subsidy was eliminated, demonstrating how buyer behavior can quickly influence manufacturer decisions (BMI, 2025).
Car buyers have significant leverage to lower costs, shape the variety of available products, and compel automakers to modify their production approaches.
Bargaining Power of Suppliers
New Industry
In the agricultural equipment sector, suppliers have some, but not much, influence. The number of suppliers, the cost of materials, and the degree to which the sector depends on specialized components like engines, Steele, electronics, and precise technologies all influence this. The industry is highly unstable and requires a lot of money, making it susceptible to changes in supplier prices (IBISWorld, 2026).
Most materials, such as steel and aluminum, are acquired from major worldwide suppliers, thus no single supplier has major influence due to widespread availability. However, taxes and trade barriers can raise material costs, providing suppliers indirect pricing power and increasing manufacturing costs. This might result in higher equipment prices, decreased demand, and lesser profit margins for businesses.
Special parts like engines, GPS systems, and sensors are made by fewer companies, which gives those suppliers a better advantage. Manufacturers have to invest a quite a bit in "precision agriculture features" which often use exclusive technology from a small number of suppliers (IBISWorld, 2026).
Overall, suppliers have a small amount of control because basic materials are readily available and competitive, but unique parts and import taxes can boost supplier influence and drive up manufacturing costs for new businesses.
Automotive Industry
Suppliers in the US auto industry have significant bargaining leverage since crucial materials and parts such as engines, transmissions, powertrains, battery components and electrical systems, are supplied from a small number of worldwide suppliers. Tariffs on engines, transmissions, powertrains, and electrical components raise manufacturers' prices, giving suppliers greater control. Research also notes that the United States relies heavily on imported parts, particularly from Mexico, which accounts for more than 80% of heavy-duty vehicle imports (BMI, 2025). Because manufacturers have few alternative options, it gives suppliers more leverage.
The rising cost of materials such as steel and aluminum, increase supplier power, (BMI, 2025). Because only a few companies can create specialized vehicle parts on a large scale, there is little competition among suppliers, resulting in high prices. In some situations, such as battery materials, canceled U.S. production projects have contributed to supply shortages (BMI, 2025).
In short, strong supplier influence raises production costs, making it more difficult and expensive for automakers to obtain the components they require to compete.
Comparison Summary
Both industries face strong supplier influence, high capital requirements, and shifting customer preferences. The automotive industry is saturated with strict regulations and tariff‑driven costs, creating intense competition. The agricultural equipment industry offers more growth, fewer competitors, and lower structural barriers. EVs, hybrids, and autonomous technology create more disruption in the automotive sector. Overall, agricultural equipment offers a more favorable diversification opportunity.
Summary of How Findings Address the Problem
Porter’s Five Forces shows major obstacles in the automotive industry, including fierce rivalry, powerful suppliers, strict regulations, and rising costs. These factors limit growth and long‑term success. The agricultural equipment industry has fewer competitors, easier entry, and stronger long‑term potential. Since the automotive market is crowded and heavily influenced by electric, hybrid, and self‑driving technologies, diversifying reduces risk and positions the company for stable growth. The analysis supports expanding beyond the automotive industry.
References
Autodesk. (2024). Driving the future: 10 automotive industry trends and predictions.
BMI Research. (December 2025). United States Autos Report: Quarterly Report: Forecasts to 2034. Fitch Solutions Group Limited.
IBISWorld. (2026). Tractors & agricultural machinery manufacturing in the US (NAICS 33311). Retrieved from https://my.ibisworld.com
U.S. EPA. (2025). Highlights of the Automotive Trends Report.
