Competitive Analysis : Porter's Five Forces Framework

1646 Words Dec 6th, 2015 7 Pages
Competitive Analysis Lauren Herter

SIC Code: 3711 Motor vehicles & Passenger Car Bodies [1]
NAICS Code: 336111a Car & Automotive Manufacturing in US

Industry definition: "Companies in this industry manufacture cars and automobile chassis. These operations, which are referred to as automakers, typically produce cars, including electric cars, in assembly plants. The manufacture of light trucks (e.g. vans, pickups and SUVs), heavy trucks and motorcycles is excluded from this industry." [2] Porter 's five forces framework assesses the competitive pressures a company faces within the industry. The five forces of competitive pressure include: competition from rival sellers, competition from potential new entrants to the industry, competition from producers of substitute products, supplier bargaining power and customer bargaining power. The model helps us determine the strength of competitive pressures and profitability of an industry. [3]

FORCE
STRATEGIC SIGNIFICANCE
New Entrants
Weak
Substitutes
Moderate
Rivalry within the Industry
Strong
Suppliers
Weak
Customers/Buyers
Strong

New Entrants The threat of new entrants refers to the threat posed by new competitors within an industry. If it is easy for new firms to enter the industry barriers to entry are low and the threat of new entrants is high. A profitable industry attracts more competitors. Economies of scale, learning curve effects and other macro factors impact the nature of an industry 's…
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