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Porter's Five Force Analysis: The Auto Industry

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Identify each auto industry structure correctly. provide an analysis of market structure requirements including number of firms, uniformity of products, ease of entry and exit and include sources as well please.

Porter's Five Forces Strategy Analysis as it applies to the Auto Industry:
- Bargaining Power of Buyers
- Bargaining Power of Suppliers
- Competitive Rivalry in the Industry
- Threat of New Entrants
- Threat of Substitutes

In addition to identifying all five forces provide the detail for relating them to the requirement of market structure. Clearly identify an appropriate application of each concept identified in the scenario, for each concept identified, define at least one future opportunity.

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Introduction

Automobile industry is responsible for designing, developing, manufacturing, marketing, and selling the motor vehicle in the marketplace that contributes in generating revenue for the country. In US automobile industry, various evolution has been introduced that are influenced by various innovations in fuels, vehicle components, societal infrastructure, manufacturing practices, as well as changes in markets, suppliers and business structures (Center for Automotive Research, 2010).

This development in engine was also the result of discovering of the new energy carrying mediums, new fuels such as, steam in the 1700s, gas and gasoline in 1800s etc. US automobile industry contributes about 20-25% of the world vehicle production. In produces light trucks, minivans and utility vehicles that is quite competitive (Murray, Mayes & Hoffman, 1999). As a part of the innovation, environmental regulations have contributed in the industry. It is because strict environmental regulations and high fuel prices forced the industry to develop low emission vehicle technology.

Automobile Industry

Industry refers to the group of companies that are related or associated with each other in terms of primary business activities. Group of firms that are operating in the automobile business is collectively called automobile industry (Bradley, et. al, 2005). Automobile products are extremely complex and technological sophisticated that are commonly used by the customers. Automakers within the automobile industry produce cars to maintain balance between productivity and efficiency with quality and innovation (Center for Automotive Research, 2010).

Industry Profile

Significant developments that are occurred in the industry with the passes of time are included in the industry profile. Along with this, industry profile also highlights the key trends and issues within the industry (Bradley, et. al, 2005). US automobile industry has shaped to the identity of US economy as it generates millions of job. From the past few years, domestic automotive assembly firms such as GM, Ford and Chrysler have lost their market share with the international firms those entered in the US market such as Toyota, Honda and Hyundai (Murray, Mayes & Hoffman, 1999).
At the end of 2008, output of auto sector was 2% of GDP and overall manufacturing contributed 11.5% of GDP in US. ...

Solution Summary

A Porter Five Force Analysis is provided for The Auto Industry.

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See Also This Related BrainMass Solution

External Environment Analysis

SLP02 - External Environment Analysis (Do Not Select a Specific Company)
Note: Throughout this course, it is recommended that you complete the SLP before you undertake the case analysis. Before you begin the SLP, you need to read the background materials thoroughly.
Several of the background readings (Attached - SLP02 Background Material) referred to gathering data to support the external analysis. Be sure to review those readings so you know what kinds of data are used when conducting an external analysis. The purpose of this SLP is to develop the part of our strategic toolkit that deals with gathering information for a 5-Forces and PEST Analysis.
Step One: The first step in an external analysis is to determine to which industry your target business is classified. Usually this is done through North American Industry Classification System, or NAICS code. Find a website or library reference that would enable you to determine the NAICS code of any business (Do Not Select a Specific Company or Business - select an industry such as fast foods, retail, automotive, etc..).
Step Two: Research web and library sources that would give you the kinds of data you would need to conduct a Porter 5 Forces analysis. We are not looking for sites that describe the 5 Forces, but for sites that would have data that you could use to analyze the degree of competition in an industry, or the ease of substitution, for instance. You have undoubtedly run into such websites and publications before in your core courses. Typically, they are government sources providing statistical data, industry or trade magazines or journals, general business publications, financial websites, websites for trade associations, etc. This is a two step process: First figure out what kinds of information you would need to evaluate each of Porter's forces, and then find a source that will give you that information. Find a minimum of 2 different sources for each of Porter's Forces.
Step Three: Research web and library sources that would give you data to support a PEST analysis. Find at least 2 different sources for each PEST variable.
Step Four: In a 2 page paper (not including cover page or references), list your resources from steps 1-3 above. For each source, provide a title and a URL, if applicable. Write a short paragraph explaining what information is available, how it would be useful in an external analysis, and critiquing the source (for example, What are the limitations of the source? Is one better than the other? Why?)
SLP Expectations:
You may be concise in your presentation of this SLP. It does not have to follow the conventions of a written case paper. Tables or bulleted lists may help you present the information concisely and make it easy for the reader to quickly grasp the information. You do not need an introduction or conclusion, but I would like to see a complete references for each source on a separate reference page.
Turn in your paper in to Coursenet by the due date for this module.

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