Michael Porter 's five forces is a framework that analyzes the industry’s environment and competitors to identify whether a product, service, and/or business strategy will be profitable. The aim of the five forces is to strategically stay competitive, improve the position, and stay attractive. The five forces model can be useful to understand the current position of the firm, threats of new entrants, threats of substitute, buyers bargaining power, suppliers bargaining power, and competitive rivalry. These insights can then help the firm use the strengths of competitors for advantages and improve the firm 's weaknesses.
The Threat of Entrants for Honda is low. Threats of new entrants refer to new firms entering the industry which will bring …show more content…
Honda customers are looking for fuel-efficiency, reliability and affordability. There are other manufacturers that can provide alternative vehicles around the same price point, but better quality is arguable. According to Axlegeeks, Honda rates among the highest when compared with others in the same industry. The higher the cost of operating a vehicle, the more likely alternative transportation will be an option. However, alternative transportation such as bicycles, subways, trains, and buses, depending on convenience and customer needs, are not so much of a treat because it does not offer utility and independence. As mentioned, Honda customers are fuel- efficient, so therefore, fuel price can have a large effect on the consumer 's decision to buy …show more content…
There are many supplies in the auto industry, so those who provide the components of automobiles like fenders, seats, tires, headlights, etc. can have a low bargaining power since suppliers rely heavily on one or two automotive manufacturers to buy the majority of their supply. Supplies will do whatever it takes to maintain a good relationship to keep automotive manufacturers from switching suppliers. “As a result, suppliers are extremely inclined to the demands and requirements of the automobile manufacturer and hold very little power" (Investopedia). However, main components and more complicated parts such as engine, chassis, or even technology can put a higher bargaining power on suppliers. Honda replies on just a few main suppliers who specialize in Honda’s technology and engine components for various machines in the manufacturing of Honda’s automobiles, motorcycles, aircraft, and power
The Threat of Entrants for Honda is low. Threats of new entrants refer to new firms entering the industry which will bring …show more content…
Honda customers are looking for fuel-efficiency, reliability and affordability. There are other manufacturers that can provide alternative vehicles around the same price point, but better quality is arguable. According to Axlegeeks, Honda rates among the highest when compared with others in the same industry. The higher the cost of operating a vehicle, the more likely alternative transportation will be an option. However, alternative transportation such as bicycles, subways, trains, and buses, depending on convenience and customer needs, are not so much of a treat because it does not offer utility and independence. As mentioned, Honda customers are fuel- efficient, so therefore, fuel price can have a large effect on the consumer 's decision to buy …show more content…
There are many supplies in the auto industry, so those who provide the components of automobiles like fenders, seats, tires, headlights, etc. can have a low bargaining power since suppliers rely heavily on one or two automotive manufacturers to buy the majority of their supply. Supplies will do whatever it takes to maintain a good relationship to keep automotive manufacturers from switching suppliers. “As a result, suppliers are extremely inclined to the demands and requirements of the automobile manufacturer and hold very little power" (Investopedia). However, main components and more complicated parts such as engine, chassis, or even technology can put a higher bargaining power on suppliers. Honda replies on just a few main suppliers who specialize in Honda’s technology and engine components for various machines in the manufacturing of Honda’s automobiles, motorcycles, aircraft, and power