Analysis Of Porter 's Five Force

A peculiar trend which was prevalent in the last decade, besides globalization, was a limited number of producers which emerged due to diversity among products and uniformity across national markets (Agarwal, 2004). Amid global conditions that amount to an economic and industry crisis, the world’s auto-makers still consider innovation and technology to be the most important trend over the next five years. Fuel efficiency improvements, alternative fuel technologies and

Cars have always been a big deal in the United States. Ever since Henry Ford invented his Model T in 1908, the automobile industry in the United Sates has continued to grow (“Henry Ford Changes the World,” 2005). While Ford was not the original inventor the automobile, he created the first automobiles that were affordable, easy to drive and maintain, which made it possible for everyday people to own cars. Ford’s assembly line building technique became the benchmark for all the big auto manufactures of that day (“Henry Ford Changes the World,” 2005). Ford, General Motors, and Chrysler soon became known as the “Big Three” American automobile companies (Foner & Garraty, 1991). While the automobile industry has immensely grown and changed from the early 1900’s to now, it continues to be at the forefront of industries creating environmental concerns worldwide. Issues currently being faced by the American Auto Industry include: having to handle tough global competition by foreign automakers, figuring out how to incorporate new technology to power vehicles (such as electric or ethanol run cars), and having to face new higher government and consumer quality and environmental standards.

The automotive industry designs, develops, manufactures, markets and sells motor vehicles, and is one of the world’s most important economic divisions by profits. This analysis focuses on the industry, specifically, manufacturers of automobiles. There are five competitors in the StratSim environment: Firm A, B, C, D, and E. Industry sales in the most recent year were 4.3 million units, with expected growth in the next year. Within this industry, there are seven-vehicle classes: Economy, Family, Luxury, Sports, Minivan, Truck, and Utility. There are two new classes with potential – if properly marketed.

There are many environmental challenges facing the American auto industry. In this paper we will focus on; the challenges within global competition, new technologies for powering the products this industry produces, the effect of emissions on the environment and the government’s reactions to these effects, as well as the consumer’s product opinions.

The American Auto Industry was once a shining example of the American Dream and the innovations of a growing industry. The 2009 recession tested the strength and morale of the industry and it has answered back with growth in the last few years. This paper will discuss the global competition, new technology, environmental impacts, consumer opinions and a SWOT analysis of the U.S. industry.

Porter’s five forces model analyzes the five competitive forces that shape every industry: intensity of industry competition, potential of new entrants into the industry, the power of substitutes, the power of suppliers, and the power of buyers. This model is used to identify an industry’s weaknesses, strengths, and general structure in order to establish a profitable corporate strategy that is perfectly suited for the industry. After analyzing the five forces that shape this industry, Foot Locker’s corporate strategy and business practices can be analyzed to see how the company is responding to industry trends and adapting to changing economic conditions. Furthermore, a SWOT analysis can be used to categorize these industry trends as either strengths, weaknesses, threats or opportunities for Foot Locker.

Michael Porter identified five forces that influence an industry. These forces are: (1) degree of rivalry; (2) threat of substitutes; (3) barriers to entry; (4) buyer power; and (5) supplier power. For more on this framework proposed by Porter, please see Appendix C. Like other industries operating under free market, capitalistic systems, viewing the automotive industry through the lens of Porter’s Five Forces can be helpful in understanding the forces at play.

In 2013, an American auto industry report dubbed, ‘‘Redefining the American Auto Industry” was compiled by the Association of Global Auto makers and the American International Auto dealers ` Association. The aim of the report was to establish and indicate how international or global auto makers were impacting the US economy in general. In 2013, international automakers in American produced more than 5 million vehicles across America which were sold in the US market with 800 000 of that number being exported to over 60 countries outside the United States. Global competition in the US auto industry and the presence of International Auto Makers in the US has also had positive spin-off effects with respect to great employment opportunities elsewhere within America. Every stage of car making represents an

Global COMPETITION in the industry: Global competition has expended in the auto industry because of an increase in global trade. This has resulted in the decline of sales in the American auto industry whilst sales in the Asian industry especially China has increased. In 2009 sales in the U.S. hit their lowest point meanwhile, it doubled in Asia generally, especially in China. (loc.gov. 2014). One of the reason for this decline in the American Auto sales is because the Japanese automakers have altered the U.S. manufacturing models and are selling it in the global market at a less expensive rate. The price and innovation is attracting a lot of customers’ to this part of the world leaving the American industry to suffer.

The American automotive industry provides a unique and very important role in the economy of the United States of America. Not only in the United States but even around the world, the American Auto Industry is a leader in job creation, production, exportation and even in research and development. In the mid-20th century, America’s top auto manufactures have been General Motors, Ford and Chrysler. They were producing two-thirds of all the cars and vehicles sold around the world. There are still other smaller car manufacturers such as Anteras, Avanti, Shelby American, De Lorean, Dragon and several others. As of 2010 the auto industry contributed to about 4% of the United States Gross Domestic Profit and employed about 8 million jobs.

Chapter 3 is framed into an overall overview of the automotive sector, as well as its history and its main characteristics will be presented with the support of figures and tables. The analysis sustains previous conclusions about the connections between two major examples in order to see the theory within specific practical examples. At the end of the chapter, a conclusion will be drawn of the presented case studies of Renault and Ford, highlighting the importance of the auto industry in the

By the turn of the century hundred of small companies were producing automobiles both in Europe and in America. By 2004, the industry was in different stages of its life cycle in different parts of the world. The US industry entered a period of rapid growth during 1910-28, and reached its peak of production in 1965. In the two decades up to 2004, car production was on a downward trend, but if trucks were included, output was broadly stable (see table 4.2). In Europe and Japan too, total production was showing a declining trend The problem of market saturation was exacerbated by the tendency for cars to last longer(see table 4.3). [Tables 4.2 and 4.3 about here] As a result, the automobile producers have looked increasingly to the newly industrializing countries for market opportunities. During the 1980s and 1990s countries such as Korea, Malaysia, Taiwan, Thailand, Turkey, Brazil, and Argentina offered the best growth prospects. As these markets became increasingly saturated, so China, India, and the former Soviet Union were seen as the ““next wave”” of attractive markets. With the opening of many of these countries to trade and direct investment, the world production of cars and trucks s continued to grow (see table 4.4 ). [Table 4.4 about here]

Global COMPETITION in the industry: Global competition has expended in the auto industry because of an increase in global trade. This has resulted in the decline of sales in the American auto industry whilst sales in the Asian industry especially China has increased. In 2009 sales in the U.S. hit their lowest point meanwhile, it doubled in Asia generally, especially in China. (loc.gov. 2014). One of the reason for this decline in the American Auto sales is because the Japanese automakers have altered the U.S. manufacturing models and are selling it in the global market at a less expensive rate. The price and innovation is attracting a lot of customers’ to this part of the world leaving the American industry to suffer.

When analyzing and industry, it is important identify and define the industry in question before the industrial analysis begins (Parnell, 2014). Additional important considerations when analyzing an industry include determining which stage in the industry life cycle the industry currently resides, as well as a thorough identification and analysis of key competitors. Skoda operates in the global automobile manufacturing industry. The global automobile manufacturing industry, for the purpose of this analysis, consists of automobile manufacturers that produce automobiles for commercial purposes. The global automobile manufacturing industry has seen increasing competition as the world has moved towards more free trade agreements and increased globalization. The global automobile manufacturing industry is still in its growth stage as evidences by increasing number of consumers in the world’s most populous markets, such as China and India. New companies are rushing into the automobile industry in order to meet the needs of this potentially huge consumer base, and currently dominant companies such as GM, Toyota, and Honda are quickly expanding into the markets, in many cases signing joint-ventures with companies already present in the market (Associated Press, 2015). Important competitors for Skoda include Toyota, Honda, GM, and a variety of joint-venture automobile producers in its key markets. While new companies have the potential to disrupt the industry, the high entry

The automotive industry as it is today is the home of numerous competing brands. Some of these dominant brands include Mercedes, Volkswagen, BMW, Subaru and Nissan, with a vast array of motor vehicles for different uses. Automotive manufacturers faced rough business conditions in final four years of the first decade of the 2000’s due to the sharp increase in fuel