Threat Of New Entrants
The barriers to entrants deter new competitors from entering the market and creating more competition for established firms. Profitable markets attract new entrants, which erodes profitability, unless incumbents have strong and durable barriers to entry. There are several major barriers to entry and they include economies of scale, the capital requirements, and product differentiation, switching cost and government policy. In regards to our Eco Powered Engines, the most crucial barrier to enter this business is patent protection. In China, there are 3 forms of patent protection that include Invention patent, design patent and utility model patent. While using invention patent, EPE would impose a 20-year patent protection. EPE would ask for the right granted for a fixed period with a minimum 20 years for the invention protection. This would reduce or eliminate competition with potential and existing firms who would be pose a threat of entrants. Included the patent protection is the methods used in manufacturing, the manufacturing materials etc. Another major barrier to entry is the capital requirement for starting a new business like the Eco Powered Engines, which include the cost of building or purchasing facilities and equipment, and creating inventories. In addition, product differentiation would also be a problem for new companies because our firm would have already marketed our product and have a number of loyal customers. Any new would have to spend lot of money to get their name out there and would have to convince the customer to begin to buy their own engine.
Another major problem for new business to compete is getting their products distributed. This is a new industry a getting the product distr...
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...ry profitable in the long run.
RIVALRY AMONG EXISTING COMPETITORS
The degree of rivalry or the intensity of competition is the final force for EPE five-force theory. This point is crucial in evaluating the completion that exist among current firms in the industry. Although, EPE manufacture a unique type of Diesel engine for motor vehicles, there are other manufacturers out there who are competing based on product type. Existing competitors include: Anhui Quanchai Co. ltd (manufacturer and distributor of diesel engine) and Hebei Energetic-Ox Motor Group (enterprise consisting of 12 branch factories. Their main products include: electric motors, car oils and filters. Although there are competitors in the industry competing, EPE offer product quality guarantees, price guarantees based on materials, components and protection processes, environmentally friendly.
• Distributor agreements: Finding and securing agreements with exceptional manufacturers and distributors will be an absolute need for success. A unique product will support the brand message. Products, Services, and
Increasing environmental awareness, coupled with a responsible American government and improved technology, have all contributed to the comeback of low-and zero-emissions vehicles in the US. It remains to be seen whether the automakers and oil companies will once again work to halt this progress, or embrace it as the technology of a more responsible future.
Compare to the pure competitor, the monopolist has a longer lifetime and therefore it allows the firm to have more opportunities for research and development from which the firm will reap the benefits. This might bring production cost down, lowering prices, increase production rates and raise the quality of goods (Ulbrich, 1990). The development of technological innovation will overcome technology barriers and allowing the growth of a new era of prosperity, hence fortifying why economy would benefit from monopolies that conducting research and
Distribution channels for when, how and where an organisation’s products are distributed to their consumers. [REFERENCE] The organisation needs to carefully place where they want to distribute their products. For instance, they may have an expensive handbag, so they it would make sense to place it in upmarket department stores and boutiques so that the product is seen as being more exclusive and it also makes it more difficult to obtain if they aren’t available everywhere. [REF] However, if the product is seen as too difficult to obtain, it could affect the overall opinion of the product, which could result in less sales as consumers in developing countries would not consider it a necessary purchase so may choose to go without it.
The 5-Force Industry Analysis first introduced by Michel Porter, Harvard Business School professor, a quarter-century ago. This theory examines the suppliers, buyers, product substitutes, existing firms’ rivalry and new entrants in a firm’s product market.
General Motors’ direct competitor is the company that operates in SIC (Standard Industrial Classification) code 3711 – Motor Vehicles & Passengers Car Bodies. In this paper, the direct competitor of General Motors is the big three automobile companies with similar market share and accounted for total 60% of market share in the United States. Therefore, General Motors’ direct competitors are Ford Motor Company, Toyota Motor Corporation, and Fiat Chrysler. (See Exhibit 4)
While being employed in the retail industry for over three years I established a love for learning the different ends and outs to the industry. The industry is currently growing for the Follett Bookstore Company which was founded in 1873, in the state of Illinois. In most businesses I am positive that Porter’s five competitive forces has been use in more than one way.
...rther then the end of 2010, the introduction of the electric car is not far to come. With proper government regulations and consumer knowledge, adoptability of the electric car is possible. However, one can drastically differ in opinion as to why the required elements to support such a vehicle were not readily planned to facilitate such a change. The inadequacies draw wavering concerns for both consumers and business looking for the return of value and profit. The larger picture needs to be remembered in which oil is not a renewable resource and results in pollution and environmental hazard. Consumers and business must work together to overcome the roadblocks down the road and support each other in the introduction of and future of the electric car. Adjustments will have to be made on both sides to ensure success and minimize the society and economy disruptions.
Most people do not know but electric vehicles are out there for people to use. They have not yet replaced the internal-combustion engine as the vehicle of choice for most but electric power does have its place in the world. Electric Vehicles are focused into two basic categories: niche markets and environmentally conscious households. These are both small parts of the economy but it is still important to note that they have been successful in some areas. There is a good chance that growth can occur from these two arenas, but only time will tell.
I choose to do the porter’s five forces analysis over the automotive industry. But before I start talking about the automotive industry I would like to talk about what the porter’s five forces model is and what it does. “The porter’s five forces model is a tool for examining the industry level competitive environment, especially the ability of firms in that industry to set prices and minimize costs” (McNamara, 2012). This model describes the competitive environment in terms of five basic competitive forces. “These forces are: the threat of new entrants, the bargaining power of buyers, the bargaining power of suppliers, the threat of substitute products and services, and the intensity of rivalry
There are a variety of challenges that firms may face when attempting to be the best in their specified industry. Economic and political challenges can make it difficult for companies to maintain a competitive advantage. In addition to maintaining a competitive advantage, some firms also find difficulty in keeping its branding alive and by attracting customers as their strategies, products, and management change over the course of time. Industries such as the automotive industry, healthcare industry, retail industry, and many more experience a variety of challenges based on their competition. Firms must create successful strategies in order to maintain competitive with their competition and in order to gain advantages in their industry (Hitt, 2013).
...ations in host countries. Some problems that BMW face is going global into the Asian market for example china does not permit BMW to sell its products directly to its public it must go through government organisation for distribution. It also wants BMW to manufacture at least 80% of its parts in China, which is not possible as they don’t have a plant in China. And in India the tariff is too high, which makes it hard for BMW to import painted body into the country. According to India’s regulation BMW is not allowed to import more value than they are exporting.
When a business aims to be as successful as possible in selling its products and services, it must examine in detail whether or not the products will be attractive and necessary; if the price is optimal; if the product is being distributed in the best locations; and finally, how interest and awareness can be created for the products. In order for a business to target all of these elements at the right people at the right time, it must employ the right type of marketing mix: Product, Price, Place and Promotion.
The threat of new entrants is moderately strong. Incumbents do not strongly contest entry of newcomers, but existing industry members are consistently looking to expand their geographic reach and offer a broad product assortment. Brand awareness and customer loyalty are high and greatly important i this industry.
To explain the barriers of entry, let us take the example of America's best-selling SUV in 2014 which was the Honda CR-V, for the third consecutive year followed by Ford Escape. These two companies with their immense economies of scale are posing a high barrier to entry for their share of the market. Honda CRV is able to offer the better fuel economy and safety rating without incurring a loss and maintaining the majority of the market share. This makes it difficult for firms like Volkswagen who are leaders in Europe to enter this market.