Most of these "new" car companies such as Scion are not new companies because they are under a parent company (Scion is under Toyota). I don't know any car companies that have recently entered the market. Like what you said, brand loyalty is an important factor contributing to a firm's difficulty in entering. Including a table is a great idea! In regards to the threat of new entrants, I think it is low because I believe it is very difficult for a new company to enter into this industry. That may cause the industry earning lower profits when the cost of the competition is high. On the other hand, for those people who live in Utah, upstate NY or suburb area, car is the only transportation tool other than walking.Ĭompetitive Rivalry between Existing Players: LOWĬompetition between existing automobile companies is high because there are too many choices for the customers. These substitutions really make our life easier if we live in the cities. They are bicycles, subways, buses, and trains. It is true that there are many of transportations substituting automobiles. Based on a variety of the lifestyles, people choose to purchase a car in a different way. Moreover, because of the global warming and other environmental effects, a lot of the manufacturers make their cars unique in order to protect the environment. In addition, since there are many competitors, consumer have more choices to select a cheaper, but good quality car. The car has to efficient, which means saving gas, protecting our safety, and running fast. Besides that, the quality of the car is an important issue. For those rich people who love cars, they always purchase the new released and attractive model. People always want a new and nice looking car. The factors that affect consumer to make a buying decision are: the appearance, quality, price, and environmental effect. There are various brands and models of the cars to choose from nowadays. If suppliers can’t meet those basic considerations, it is hard for them to survive. The main qualifications of the suppliers are the quality, cost, and delivery of the products. For example, Toyota has more than 10 different suppliers in US. That’s because numerous suppliers rely on some particular auto manufacturers to buy their products. Suppliers have a little power in an automobile industry. The expansion of the foreign entrants decreases the market of American companies. opened its first office in Ohio, the major competitions began. However, some of the well known foreign companies entered into US car industry easily, for instance, when Honda Motor, Co. It is not that easy for an entrant to enter into a car industry because of the brand loyalty of customers. However, the biggest competitions are the foreign auto manufacturers, Toyota and Honda. They are General Motors, Ford, and Daimler Chrysler.
In America, there are three major automobile manufacturers. Globalization enables foreign auto dealers to enter American market easily and also creates competition.
Competitive Rivalry between Existing PlayersĪutomobile is one of the most convenient transportation tools in our modern society today.The five forces that Michael Porter has identified are widely used to assess the structure of any industry. The management can make better decision by using the information that evaluated from detailed Five Forces Analysis. Porter’s model supports analysis of driving forces in an industry.
Other than a SWOT analysis, this is another analysis tool to identify opportunities and risks before entering an industry. Five Forces Analysis was developed by Michael Porter to better identify competitive opportunities and attractiveness within an industry or market.