Porter's 5 Forces and the Us Auto Industry

3361 Words Nov 24th, 2011 14 Pages
Research Project #2: Porter’s Five Forces Applied to the US Auto Industry

Ty Webb

State University

ECON 600

Dr. Frederic

(2.) Abstract This report focuses on the identification, analysis, and application of Porter’s Forces to the United States automobile industry. The report focuses on the application of Porter’s Five Forces to the industry as a whole, and is broken down into the individual applications of each force. Sources used in the production of this report are drawn from many disciplines and range from encyclopedia-based data, government reports, widely published periodicals, to industry opinions. The goal of the report is to give the reader a clear concise understanding of the US auto industry and a general picture of how
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These figures probably come as no surprise by current market standards and expectations; however, these figures also suggest and demonstrate an important shift in the US auto industry in general. No more are the days of the “Big Three” and their dominance of the market without foreign influence and challenge. The US auto industry is alive and thriving with an abundance of oversea firms and production that has captivated and elevated the consumer auto market domestically and will continue to do so for the foreseen future.
(3.3) Market Structure The current structure of the US auto industry is a who’s who of Fortune 500 companies, with long track records of success, and gold mines of innovation. The current market structure in place has many of the same foundations as the industry of the pre World War II era, with some important foreign additions from Japan and other countries (“Markets Data Center”, 2011). In 2010, over 28 automobile firms registered sales within the United States. The total number of foreign firms doing business in the US was 25. To make the point more saliently, 90% of all firms selling autos within the US are from foreign soil. This number is a stark contrast to what the industry looked like in the pre World War II era, and is probably hard to imagine for the average consumer. However, the top producers in the US market
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