Porter's Five Forces In The Automotive Industry

Porter’s Five Forces Analysis

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

In 2012 the automobile supply industry business was shattered, several suppliers where relying on a few automakers for the purchase of the majority their vehicles. This was a huge mistake at the time and one of the many reasons that caused several car companies to fail and fill for bankruptcy. Due to this fact the automotive suppliers were holding limited power and were more gullible to the demands and requirement from the automobile manufacturers. Therefore many automotive suppliers in 2012 were losing their bargaining power in the automotive industry thus, empowering the automotive manufacturers instead. The suppliers of the automotive industry where simply losing their ability as vendors to increase their prices of the automotive manufacturers

Since the year 2002 the trend has shifted away from the big three here in the United States and started shifting towards our international competitors with their slim yet fast automobiles. If this trend is to continue for another decade then the market share would shift in a huge favor towards the international competitors and leave our domestic vehicles with hardly any share of the market, relatively around thirty percent I would estimate. So the future strategy of our domestic automobile industries should be relatively simple. We should look at our international competitors like Toyota and see what they are doing to their automobiles that are making them so popular over here in the United States. After seeing what factors make Toyota more appealing to U.S. consumers, we should then copy their methods and apply them to our vehicles to earn back our customers trust and enthusiasm in our vehicles. Next we should build upon the methods that we have learned from our international competitors to take our vehicles to another level above the competition. By doing this we will be able to regain any lost profits or market share that we may have lost to the international competitors and gain the respect and favoritism of the