1. Introduction
2. External Analysis
Porter’s Five Forces Analysis – Ford The competitive structure of an industry is an important element of identifying factors that are a menace of decreasing profitability. One of the most adequate forms of assessing competitive issues is Michael Porter’s five-force analysis. According to Michael Porter understanding the external environment in which a firm operates in, is essential for a successful business. Porter (2008) displayed five such factors: 1) threat of new entrants, 2) the power of suppliers, 3) the power of buyers, 4) the threat of substitutes, and 5) rivalry among existing competitors. The evaluation of these five forces provides managers with the ability to form an optimal strategy, due to external opportunities and threats being taken into consideration.

The existence of new entrants in the automobile industry may force prices down and put pressure on profits. However, there are barriers to entry that favor established firms; economies of scale is mildly attractive, despite the expectation of significant economies of scale, due to indications that large size may not be as significant as one would assume. Nonetheless, entry into the automobile industry requires a large capital investment from any new entrant, indicating economies of scale is a substantial barrier to entry. Opportunity factors connected to product differentiation predict product differentiation will go from mildly attractive to highly attractive; and availability of distribution channels will go from mildly unattractive to neutral; and availability of newest technology will go from mildly attractive to highly attractive in the future. The overall results indicate barriers to entry as an opportunity for the Ford Motor Company.

Bargaining power of auto manufacturer suppliers requires inputs-labor, parts, and services; factors