Stratsim Swot Analysis Essay

1. Threat of substitute products or services

External factors in the StratSim world are the main contributors to the moderate force or threat of substitution. In a mature market such as StratSim, it is important to note that there are multiple competitors to consider to identify treat of substitute our firm’s vehicles, and our firm must rein in the treat by making our products more accessible, affordable and convenient.

Our firm mostly caters to Value Seekers and Families, who are particularly interested in vehicles such as economy and/or truck. Based on this argument we can assert that the higher the cost of operating a vehicle, the more likely people will seek alternative transportation options. While it has already been assumed that the price of gas will stay constant for the first few years in the StratSim world, other attributes that may be of particularly interested to our buyers are safety

and quality. Unfortunately, our firm does not excel at either of these attributes.
For customers looking to purchase Trucks with bigger size and higher quality than an average trucks in the market, attributes of models such as Delite and Detonka fall outside of the realm of the common product boundaries. This will further increase the propensity of customers to switch to alternatives, such as Astruck and Alec. Our firm needs to construct specific competitive advantages over competitors in attributes such as safety and quality to make it more attractive to other target markets. But since differences in quality which are usually accompanied by differences in price, such trade-off needs to be settled more carefully in coming years.
2. Bargaining power of customers (buyers)
3. Bargaining power of suppliers
4. Intensity of competitive rivalry
Firm E is our biggest competitor because we compete against each other in similar market segments.

Firm E also has higher technological capability to reach out to market segment that our firm dominates. It has also been noted that the stock price of Firm E rose $7 to $50, increasing its value and giving the firm an incredible amount of capital to be invested for market capture. It has also been identified that our firm mostly compete against other players in market segments that are more price sensitive than those in others. This generally results in generating low returns when the cost of competition is high. For this particular market segment, however, price-based competition does not necessarily lead to increases in the size of the marketplace. Although, price-based competition is minimized with minimal gross margin for economy products, this competition could be intensified by providing our customers with rebates, preferred financing and long-term warranties. With such immediate capital available at hand, firms such as Firm E can attract our customer at its

advantage.
Moreover, the data also suggests the demand by Enterprisers customer segment is increasing year on year since least last 2 years, and with the current and projected economic outlook, if we were to assume that it would continue to increase, Firm E would have a greater competitive advantage; it dominates 42.7% of market in that customer segment.
Our firm also faces competition from other firms. For example, Firm A over the past 2 years has been streamlining its operations by reducing inventory and days of inventory, further reducing cost of good sold and boosting profit margin to reinvest the capital in operations. Such reduced days of inventory has a profound effect on the firm’s day to day operations.
The general economic forecast, such as higher GDP and lower inflation increase, seem to have a positive outlook on the industry. However, that material costs are expected to increase at lower rate year on year at +1% in comparison with +2.5% last year only says that most competitors will try to leverage this opportunity to increase their capacity while keeping their costs relatively constant.
Our firm, on the other hand, is a market leader in the vehicle class “Truck;” the only other competitive vehicle in that category is “Estruck.” From our analysis we concluded that Detonka leads the market not because of its superior attributes, but because of the unit price of this vehicle. Estruck provides far better features on the same model with better horsepower and size. We cannot take fair advantage of this lower price and preserve our favorable position in that category for a long time. By offering our existing customers better discounts, new entrants can quickly enter the market and weaken our position because the barriers to entry are less.
Another caveat in the automobile industry is other players’ plan to come up with vehicles that are completely redesigned. We realized that our vehicles appeal most to singles and families because they excel at providing our customers with basic transportation needs as economically as possible. Although it is true that most of the firms run at almost full capacity, it may not be the case for coming years if we were to consider technological breakthrough or higher capital reinvestments. We identified our firm, in particular, have only 2 development centers, producing vehicles with sub-par attributes, even in comparison to our competitors; this is evident in firm’s values on interior, styling, safety and quality. Styling and interior may not be important for our majority customers, value seeker and singles, looking for more economical alternatives in the market, but such consumers’ preferences may evolve over time due to market dynamics. Moreover, firms normally update their cars every year, sometimes by significantly changing the design in a way that would attract customers from completely different market segments. Although it is a risky proposition, enhancements in such attributes will certainly give other firms a competitive edge over the market share in which our firm excel.
5. Threat of new entrants
The high costs of establishing, maintaining and growing a new firm in the industry are significant entry barriers, especially in the StratSim world. These barriers weaken the effects of new entrants on companies. Thus, this part of the Five Forces analysis shows that the threat of new entrants is among the least of our concerns in growing its business and maintaining its positions as one of the top automobile manufacturers in the world.