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Write a 3 page essay on Porter's Five Forces for Global Automobile Industry.er’s five forces are used in the evaluation of how potential an industry can be by looking at the five forces that are mos
Write a 3 page essay on Porter's Five Forces for Global Automobile Industry.
er’s five forces are used in the evaluation of how potential an industry can be by looking at the five forces that are most likely to affect that industry where the forces that will be considered will be the ones that are responsible for the profitability of that industry (Williams, Hall & Champion, 2011, p. 117).
In the automobile industry, new entrants are typically a threat that is not very high and the factors that are considered when determining this treat include the hurdles that might be experienced by the new entrants such as the start-up capital requirements since the cost associated with setting up a car-manufacturing factory is very high (Kachru, 2007, p. 770). Brand equity is also a hurdle that the new entrant into the industry might face since the entrant will not have any compared to the companies that are in the emerged markets and have been in the industry for a significant period. Other hurdles and barriers include legislations and government policies in regards to emissions and safety as well as the ability of the company to distribute the cars that they manufacture. For instance, Alfa Romeo has not been in the United States since the 90’s since they could not establish a dealer network as opposed to a place like Singapore where only one is required.
Under most circumstances, the buyers of the cars have to bargain before arriving at the price, which they will pay to get the car they are interested in, and the quantity that a buyer buys is normally a good factor in the determination of this force (Edwards, 2007, p. 93). Even though the buyers that are in the automobile industry usually buy one car at a time, the still have a lot of power and this is significant as far as the bargaining is concerned. This applies in the emerged markets but in the emerging markets, the situation favours the industry more than it favours the buyers of the cars. Ultimately, the buyers always possess some buying power but the power that they have is dependent on
