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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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Solution Summary

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

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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. ...

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