New beetle Essay

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Case9 : New Beetle EXTERNAL ANALYSIS 1.     Market definition New beetle is competing in the small size car industry in the US market. 2.     Market size In US market, the total of small car sales in 2,217,813 units, which is equivalent to 32 million dollar. Market size in dollar term = 2,217,813 * ($11,035 to $18,000) = $ 32 million In 1998, New beetle sales is 137,885 units, which is 6 percent of the market. Market share in 1998 = 137,885 = 6 percent.                2,217,813 3.     Market growth The industry is considered to be in the position between the growth and maturity stage.…show more content…
Thus, the US government can intervene the final price of the vehicles. 5.     Industry Analysis (Porter's 5 Forces) 5 Forces     Degree     Rationale Threat of Potential Entrants     Low      The barriers to entry and exit this industry are high due to high costs of research & development, experiences in the components of cars, technology innovation, customer loyalty as well as the capital investment. Hence, it is unlikely that any newcomer is able to achieve economies of scale in production and distribution. The existing intensity of rivalry between competitors builds up a high barrier to new entrants. Bargaining Power of Buyers     High      Switching costs for alternative substitutes are moderate (there is considerably high involvement for buyers to choose between alternatives), there are many varieties in this industry for customers to choose from. Moreover, there are many products (including substitutes) that could provide the same benefits (usage) the buyers are looking for and cars are long lasting products. Bargaining Power of Suppliers     Low      The raw materials used to manufacture cars are readily available from many suppliers such as shock
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