Analysis Of Porter's Five Forces Automobile Industry

714 Words 3 Pages
Industry analysis
Porter’s Five Forced on Automobile industry
Threats of new entrants
Automobile industry is very specific industry, it has higher level of entry barriers. Factory facilities, machinery, labor and technology are heavily involved for automobile industry. For a new entrants in automobile industry, they need to look for mass production to achieve economy of scale in mature automobile industry. Second, the facility for automotive manufacturing is quite specialized, it has enormous capital investment and event of failure are not easily to modify. Most of the company entering to new market through merging or partnership with other existing company.
Bargaining Power if buyers
Bargaining power is moderately high in automobile industry, it will affect industry profitability by ability to provide lower selling price, higher quality product and better service. Customer buying decision will affect by some factor, they are
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Rivalry between firms automobile industry get customer several advantages such like changing prices, improving product differentiation, creatively using channels of distribution, improve relationship with suppliers. The intensity of rivalry is influenced by the automobile industry. Lager number of firm in automobile industry will increase rivalry because more firms will compete for the same customers and resources. Rate of market growth will increase rivalry because firm have to fight for the market share in a growing market. The amount of fixed costs was the result in an economy of scale which effect that increases rivalry. A common exit barriers is asset specificity. Some automobile production plant and equipment cannot easily sell to other buyer in another industry, this cause the height exit barriers in automobile industry. Diversity of rivals by different cultures, histories and philosophies, it make an industry

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