Porters Five Forces: High-End Premium Industry in China

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8. Structural Charakteristics oft he Market In this Section take a closer look at the main structural features of China’s automobile industry for luxury and premium cars. We use Michael Porter’s (1980) Five-Force model to analyze the industry. These five forces jointly determine the intensity of competition within the industry and in turn help firms to set their strategies. 1. THREAT OF NEW ENTRANTS New entrants to an industry will bring new supplies, new ideas and new competition. Therefore, the threat of new entrants is crucial to existing firms’ profitability. We analyze domestic entry, foreign entry through imports and foreign entry through foreign direct investment (FDI). The automobile industry in general requires large…show more content…
Imports and the prices of these products are affected by world demand and supply. The price of the major input steal has a sharp and immediate impact on the product price. Furthermore are auto parts and components for the high-end-market mainly importer foreignly. Despite the high bargaining power of producers of raw materials the bargaining power of all the other producers is considered to be low. Favorable 5. RIVARLY AND COMPETITION The luxury automobile market in China is competitive and concentratedand consists mainly of imported luxury cars. Hence the intense rivalry in the Chinese market is comparable to all the other car-producing nations such as US, Germany, Italy, France, India and Japan. The price competition within the auto manufacturers is increasingly high. The Chinese high-end auto market is considered to be increasingly competitive and is therefore unfavorable. Despite rivalry and competition the Chinese high-end car market is highly favorable. Since the rivalry and competition in this market is worldwide equal and therefore not more favorable somewhere else. This industry is and probably will be in the near future therefore highly favorable. Even though Porter did not list the Government as a discrete force it has nevertheless a huge impact on all the other forces and on the industry itself. The governments influence on the high-end automobile industry is

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