...Topic: Apply the Porter's five forces model on Automobile Industry and analyse the attractiveness of the Industry for Investment purpose Evolution of Porter's Five Forces Model Five forces is a framework for the industry analysis and business strategy development developed by Michael E. Porter of Harvard Business School in 1979. Michael Porter is a professor at Harvard Business School andis a leading authority on competitive strategy and international competitiveness.Michael Porter was born in Ann Arbor, Michigan. Five forces uses concepts developing, Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the industry profitability. An "unattractive" industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition". Introduction Five Forces Model by Michael Porter Five Forces model of Michael Porter is a very elaborate concept for evaluating company's competitive position. Michael Porter provided a framework that models an industry and therefore implicitly alsobusinesses asbeing influenced by five forces.Michael Porter's Five Forces model is often used in strategic planning. Porter's competitive fiveforces model is probably one of the mostcommonly used business strategy tools and has proven its usefulness in numerous situations when exploring...
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...INTRODUCTION The popular saying that goes, 'no man is an island', does not only apply to humans but can also be attributed to the business world. In order to remain active and competitive, an organisation needs to take into account, not only internal processes but also look into consideration its external environment. Factors such as competitors,new rules and regulations,changing marketplace, changing workforce and other related factors that have direct impact on the existence of the business must be seen as a crucial factor to the organisation. A business environment encompasses those factors outside the normal business activities of an organisation but directly affects its decisions and is uncontrollable by the organisation. A change in consumer's taste will likely result in a shift in demand of a product such as fashion. IMPORTANCE OF BUSINESS ENVIRONMENT The importance of analysing an organisation's business environment cannot be more emphasized. Most businesses operate in an environment and whatever occurs in that environment also affect the business. The major importance can be seen in the following : 1. Detection of opportunities and threats: A business that is able to identify potential opportunities will normally have the upper hand as being the first mover and early detection of threats will act as a warning signal of dangers ahead. 2. Coping with changes: With huge changes occurring in the society, there is need for business managers to be aware of...
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...Individual Assignment #1 Porter forces chapter 4 MAN 4720 Strategic Management In chapter 4 Porter identifies 6 forces that determine the level of competitive intensity in industry which are: threat of new entrants, rivalry among existing firms, threat of substitute products or services, bargaining power of buyers, and bargaining power of suppliers. The sixth force stated in the textbook said that the relative power of other stakeholders is to reflect the power that governments, local communities, and other groups from the task environment wield over industry activities. The first force that is introduced is threat of new entrants which explain the new competitor threat pose to existing competition in an industry. For this to happen a barrier to entry is involve which give factor or condition in the competitive environment of an industry to make it hard or make an obstruction for new business to start operating in a specific market. When an industry has a low threat the industry become more profitability bringing the business high in profit, which involves the economies of scale which in the book states Scale economies in the production and sale of microprocessors, for example, gave Intel a significant cost advantage over any new rival. Because the threat is low most industry won’t bother fighting them in the business world like a mom and pops stores or starting a new industry. But because it low and archives profitably it is weak in term of level of competitive intensity...
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...US AUTOMOBILE INDUSTRY ANALYSIS [pic] Written By: Jennifer Duhaney & Presented to: Professor Kurt Wurthman March 17th, 2011 MAN 4720 1. Industry Overview The US automobile industry has evolved over the years from steam engines, to internal combustion engines, to gas powered engines, and presently the newest innovations, alternative fuel engines, and electric cars. Henry Ford built the first car in 1896, (Gale, 2003). and then revolutionized the industry when he invented the assembly line.(David Highfill, Matt Baki, Sean Copus, Matt Green, Jennifer Smith, Matt Whineland). This invention allowed mass production which lowered the costs of automobiles for consumers. The industry includes a number of car manufacturers competing with each other in their competitive priorities, and competitive capabilities to capture market share. The major players in the industry are, the big three US automakers, Ford Motor Company, DaimlerChrysler, and General Motors. The major Japanese players who are also a part of the US auto industry are Toyota, Nissan and Honda. Ford, Chrysler and GM account for approximately 76% of US passenger Vehicles, Toyota, Nissan and Honda, Subaru and Mitsubishi account for 18%. The European automakers, BMW and Mercedes makeup nearly 2%. (Global Foresight, Inc. 2006 Report on Industry Trends). Over the years several mergers and acquisitions occurred within the industry and contributed to this global view. Some of the mergers and...
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...Management and Organizations March 8, 2013 Five Forces Analysis Tesla Motors, Inc. is a luxury electric vehicle manufacturer from the United States focused towards creating increasingly affordable, efficient, and environmentally friendly vehicles.1 Tesla is a relatively new company that accounts for less than three percent of the hybrid and electric vehicle manufacturing industry.2 This report will extensively discuss the five competitive forces that influence HEV and EV manufacturing industry and how Tesla should evolve their business strategy to account for these industry forces.3 The HEV and EV manufacturing industry solely includes firms within the United States for the purposes of this report. The industry manufactures automobiles that utilize electric motors for compulsion, as opposed to traditional gas powered automobiles. It is an emerging industry currently in the growth stage. The industry is highly concentrated with just three major players, Toyota Motor Corporation, Ford, and Honda Motor Company Ltd. The industry is profitable and expected to grow another 6.3% annually the next five years.4 In this industry the threat of new entrants is weak for a variety of reasons. First, expensive and expansive manufacturing plants are utilized by all major firms in this industry, enabling leaders to produce larger volumes of HEVs and EVs than their competitors with fewer manufacturing resources. Considering firms in this industry produce relatively large volumes at lower costs...
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...Analysis 6 2.1.1 Political and legal factors 7 2.1.2 Economic Factors 7 2.1.3 Social-Cultural Factors 8 2.1.4 Technological Factors 8 2.1.5 Environmental Factors 11 2.2 PROTON’s SWOT Analysis 12 2.3 Industry Analysis 12 Proton five forces model 13 2.3.1 Threat of New Entrants 13 2.3.2 Bargaining Power of Suppliers 13 2.3.3 Bargaining Power of Customers 14 2.3.4 Threats of Substitutes 14 2.3.5 Competitive Rivalry between Existing Players 14 2.4 Some other external factors 15 2.4.1 Change in Customer Demand 15 2.4.2 Globalization 16 PART: 3 17 Recommendation 17 3.1 How can we deal with the pressure of innovation? 17 3.2 Cost Control 19 3.4 Innovative feature’s pricing decision 20 3.4 Dealer knowledge in customers 20 Conclusion 20 References 22 Appendixes 25 Appendix-1 Supplier spending on R&D 25 Appendix-2 Changes in external force 25 Appendix-3 Critical industry skills 25 Appendix-4 Expected challenges of automotive industry 26 Introduction The report is going to conduct Proton external analysis and the report has been divided into main three parts. The first part will be discuss some background of the company. The secondary part complete external analysis through using PESTEL, SWOT and Porter five forces model. The third and last part of the report will be put forward some recommendation for the company to effectively deal with external environment of the organization. At the end a conclusion will be drawn. PART:...
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...Nissan Company: Abstract * Nissan is one of the world’s largest automobiles company, * Manufacturing locations in 18 nations and serving in around 160 locations. * In year 2007, Nissan’s Executive Vice President, Tadao Takahashi mentioned its strategy of moving to transnational from multi-domestic so at present Nissan has increased its focus on emerging markets like India and Russia. This presentation aims to evaluate Nissan’s “Go-Global” strategy. In this analysis, we will try to assess the various imperatives that ……… * Company has to operate at multiple locations, * How it chooses among various locations * How it goes about implementing the expansion plan. * Studying Nissan’s global strategy and focusing on its moves specifically in India and Russia. This analysis will conducted by using various analysis tools like porter 5 forces, SWOT analysis, and PESTEL analysis as well value chain and after analysis will suggest the better strategy for betterment of company and for future prospects. Introduction With the increasing trend of globalization and heightened competition, most of the companies at some point of time think of expanding to new locations because of different imperatives ranging from efficiency, growth, competition, knowledge or mix of few. Each company decides its own parameters while making strategic choices of a market or a country NISSAN at a glance: * Nissan is a multinational automaker headquartered in Yokohama,...
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...3 Industry Analysis: The Fundamentals When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact. —Warren Buffett, Chairman, Berkshire Hathaway The reinsurance business has the defect of being too attractive-looking to new entrants for its own good and will therefore always tend to be the opposite of, say, the old business of gathering and rendering dead horses that always tended to contain few and prosperous participants. —Charles T. Munger, Chairman, Wesco Financial Corp. OUTLINE n n n n n INTRODUCTION AND OBJECTIVES FROM ENVIRONMENTAL ANALYSIS TO INDUSTRY ANALYSIS THE DETERMINANTS OF INDUSTRY PROFIT: DEMAND AND COMPETITION ANALYZING INDUSTRY ATTRACTIVENESS Porter’s Five Forces of Competition Framework Competition from Substitutes Threat of Entry Rivalry Between Established Competitors Bargaining Power of Buyers Bargaining Power of Suppliers APPLYING INDUSTRY ANALYSIS Describing Industry Structure Forecasting Industry Profitability Strategies to Alter Industry Structure 66 INTRODUCTION AND OBJECTIVES 67 n n n n DEFINING INDUSTRIES: WHERE TO DRAW THE BOUNDARIES Industries and Markets Defining Markets: Substitution in Demand and Supply FROM INDUSTRY ATTRACTIVENESS TO COMPETITIVE ADVANTAGE: IDENTIFYING KEY SUCCESS FACTORS SUMMARY NOTES INTRODUCTION AND OBJECTIVES In this chapter and the next we explore the external environment of...
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...3 Industry Analysis: The Fundamentals When a management with a reputation for brilliance tackles a business with a reputation for poor fundamental economics, it is the reputation of the business that remains intact. —Warren Buffett, Chairman, Berkshire Hathaway The reinsurance business has the defect of being too attractive-looking to new entrants for its own good and will therefore always tend to be the opposite of, say, the old business of gathering and rendering dead horses that always tended to contain few and prosperous participants. —Charles T. Munger, Chairman, Wesco Financial Corp. OUTLINE n n n n n INTRODUCTION AND OBJECTIVES FROM ENVIRONMENTAL ANALYSIS TO INDUSTRY ANALYSIS THE DETERMINANTS OF INDUSTRY PROFIT: DEMAND AND COMPETITION ANALYZING INDUSTRY ATTRACTIVENESS Porter’s Five Forces of Competition Framework Competition from Substitutes Threat of Entry Rivalry Between Established Competitors Bargaining Power of Buyers Bargaining Power of Suppliers APPLYING INDUSTRY ANALYSIS Describing Industry Structure Forecasting Industry Profitability Strategies to Alter Industry Structure 66 INTRODUCTION AND OBJECTIVES 67 n n n n DEFINING INDUSTRIES: WHERE TO DRAW THE BOUNDARIES Industries and Markets Defining Markets: Substitution in Demand and Supply FROM INDUSTRY ATTRACTIVENESS TO COMPETITIVE ADVANTAGE: IDENTIFYING KEY SUCCESS FACTORS SUMMARY NOTES INTRODUCTION AND OBJECTIVES In this chapter and the next we explore the external environment of...
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...Spring term 2010 ABSTRACT Over the past two decades, the open-door of the market supply in China has had a massive impact on the automotive market. This development contributes to the globalization of the automobile industry that involved the integration of the Chinese domestic market into the international markets. Among many reasons, motivation to gain access to industrialized markets and to gain access to superior technology, management resources and knowledge are the most driving factors of the Chinese automotive industry for the internationalization and going abroad strategy of China´s automotive industry. This study investigated whether different external globalization drivers and internal organization factors have differential effects on various dimensions of China´s automakers firms’ global strategy. Most of the studies written about global strategies have implemented only either of the internal or the external drivers of the internationalization of the firms. The contribution of the paper introduces a more comprehensive model on the global expansion of a firm. This paper concludes that China´s automotive industry has some competitive advantages such as low cost, while, facing a number of challenges that hinder the internationalization of Chinese automobile companies. It also shows that multiple factors play an important role in firms' internationalization global strategy plan. It is thus essential that the interaction among independent variables is considered in...
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...The report is about the analysis of the environment of automobile industry and the marketing strategy for Ford Motor Company. It initiates with examining of external environment of automobile industry by using PEST analysis and Porter's five forces analysis. After the internal analyses that focus on the resource audit on brand, products, markets, technology, people and son on, the value chain analysis of the company will be conduct. Then the generic competitive strategies would be discussed through SWOT analysis, Ansoff Matrix and BCG Matrix in order to identify the general business strategy taken by the Ford Company. After specifying the company strategy by those analysis tools, the strategic evaluations would be drawn together with the strategy control methods. Finally, a suggested recommendation for the company future development will be mentioned at the end of the report. I. INTRODUCTION 1.1 Aim of The Report This report aim to identify the external environmental of the global automobile industry, measure and evaluate viable and sustainable marketing strategies using by the Ford Motor Company. Through appropriate theoretical concepts and models, together with appropriate methodologies, the organization within its contextual setting will be carefully examined, and justify recommendation will be mentioned. Though the report, how a successful corporation is operated and how its business strategy is implemented and controlled will be understood. 1.2 Company Background Ford Motor...
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...QuickMBA / Strategy / Porter's 5 Forces Porter's Five Forces A MODEL FOR INDUSTRY ANALYSIS The model of pure competition implies that risk-adjusted rates of return should be constant across firms and industries. However, numerous economic studies have affirmed that different industries can sustain different levels of profitability; part of this difference is explained by industry structure. Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates. Diagram of Porter's 5 Forces | SUPPLIER POWER Supplier concentration Importance of volume to supplier Differentiation of inputs Impact of inputs on cost or differentiation Switching costs of firms in the industry Presence of substitute inputs Threat of forward integration Cost relative to total purchases in industry | | THREAT OF NEW ENTRANTS Barriers to Entry Absolute cost advantages Proprietary learning curve Access to inputs Government policy Economies of scale Capital requirements Brand identity Switching costs Access to distribution Expected retaliation Proprietary products | | THREAT OF SUBSTITUTES -Switching costs -Buyer inclination to substitute -Price-performance trade-off of substitutes | | BUYER POWER Bargaining leverage Buyer volume Buyer information Brand identity Price sensitivity...
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...JOHNSON & WALES UNIVERSITY Providence, Rhode Island ENVIRONMENTAL ANALYSIS: Automobile insurance Industry Course: MGMT 6800 Yimeng Zhang October 4, 2014 Automobile insurance Industry- Environmental Analysis The motor vehicle insurance, refers to a kind of commercial insurance that offer liable for compensation to life or personal injury or property damage caused by motor vehicles due to natural disasters or accidents. Car insurance is a kind of property insurance. In the field of property insurance, motor insurance belongs to the young categories of insurance. This is because the car insurance comes and develops with the emergence and popularity of the car and. 1. Strategically Relevant Factors in the Macro-Environment-PESTEL Analysis PESTEL analysis focuses on the six principal components of strategic significance in the macro-environment: political factors, economic conditions, sociocultural forces, technological factors, (natural) environmental forces, and legal/regulatory factors. These are the significance factors of one industry varies and management will focus primarily on those with the greatest effect on their company. The most important factor in the vehicle insurance industry is Economic Factors. a. Political and legal factors The Automobile Insurance industry does not receive any direct assistance from the federal government in the form of tariffs. However, the National Association of Insurance Commissioners (NAIC) provides a forum...
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...ASSESSING THE POWER OF PORTER'S DIAMOND MODEL IN THE AUTOMOBILE INDUSTRY IN MEXICO AFTER TEN YEARS OF NAFTA SALVADOR BARRAGAN Master in Business Administration, IPADE Business School, 1996 BSc in Industrial Engineering, Universidad Panamericana, 1994 A Research Project Submitted to the School of Graduate Studies of the University of Lethbridge in Partial Fulfilment of the Requirements for the Degree MASTER OF SCIENCE IN MANAGEMENT Faculty of Management University of Lethbridge LETHBRIDGE, ALBERTA, CANADA © Salvador Barragán, 2005 ii Abstract It has been ten years since the signature of the NAFTA agreement among Canada, U.S., and Mexico. For Mexico, this was a decisive step away from a protectionism model toward a free trade market. One of the main purposes for Mexico in joining NAFTA was to increase the competitiveness of its manufacturing sector, especially the automotive industry. In this paper, Porter’s Diamond Model of national competitiveness and some critiques that attempt to extend the usefulness of the model are analyzed. The Doubled Diamond and the role of MNEs in a host country are both examined through a case study research of the foreign-owned automobile industry in Mexico. The findings of this study show evidence of a broader role of MNEs than in the original framework, as well as the usefulness of the doubled diamond extension to explain alternative sources of competitiveness in early stages of development. iii Acknowledgments...
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...technologies. Many of these are proprietary TMC systems only recently released for use in Toyota plants outside of Japan. March the 4th 2008 marked a significant new chapter in the history of Toyota South Africa as the company became firmly established as a true volume exporter of vehicles in TMC global proportions. Using the Five Forces model of Michael Porter is a very elaborate concept for evaluating Toyota's competitive position. Michael Porter provided a framework that models an industry and therefore implicitly also businesses as being influenced by five forces. Michael Porter's Five Forces model is often used in strategic planning. Porter's competitive five forces model is probably one of the most commonly used business strategy tools and have proven its usefulness in numerous situations when exploring strategic management model. The auto manufacturing industry are considered to be highly capital and labour intensive. The major costs for producing and selling automobiles include: Labour - While machines and robots are playing a greater role in manufacturing vehicles, there are still substantial labour costs in designing and engineering automobiles. Advertising - Each year automakers spend billions on print and broadcast advertising, furthermore, they spent large amounts of money on market research to anticipate consumer trends and preferences. Replacement Parts Production and Distribution - These are the parts that are replaced after the purchase...
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