Maruti Porter's Five Forces Analysis

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2. The External Environment - Industry Environment:
PORTER'S Five Forces:
The five force model of Porter is an outside-in business unit strategy tool that is used to make an analysis of the attractiveness (value) of an industry structure. 2.1. Industry Rivalry

 Industry growth rate
The domestic car market remained buoyant and posted a healthy growth rate of 29 per cent, higher than 26 per cent achieved in the previous year (FY2009-10), which was substantially higher than what was anticipated at the beginning of the year. Despite the unexpected demand for cars and the capacity limitations in Maruti, they produced and sold 1,271,005 units, a growth of 24.8 per cent over the previous year. This became possible due to higher levels of productivity
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Intense rivalry exists amongst existing competitors and has the effect of increasing industry competitiveness and reducing profitability where they prevail. Financial Strength assumes importance as high and is required for building capacity and maintaining adequacy of working capital.
Maruti Suzuki has no or less threats from new entrants, because Maruti has established itself as a well-known recognisable brand. It has a huge brand value and gained a good market position than any other player in the market.
Even thou most of major global competitors are present, few are expected to enter. Threat of entry is not very high due to proprietary knowledge, patents and government policies. The industry is capital and technology intensive. Huge investment is required; hence it is not easy to enter into automotive market.
For a new company, the start-up capital required to establish manufacturing capacity to achieve minimum efficient scale is prohibitive. Product differentiation and promotion supports new entrants. In the case of potential competitors, ease of entry will increase industry competitiveness and adversely affect profitability. New multinational players may enter the market. Organisations therefore create entry barriers with intent on keeping potential competitors out, and offering existing industry

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