Porters Five Forces: High-End Premium Industry in China

General Motors (GM) has been participating in the Chinese automotive industry for over nine decades. Currently, General Motors operations in China comprises of full ownership of two enterprises, 11 joint ventures with local enterprises and over 58000 employees. The brands that are being offered by GM in China consist of Baojun, Buick, Cadillac, Chevrolet, Jiefang and Wuling which supplies China’s auto market with commercial and passenger car vehicles. GM boast a sales record of 3,870,587 vehicles in China which is a seven percent increase from previous years. General Motor’s overarching goal in China is to be the most valued automotive company in China with its partners. Recently, General Motors have invested in China’s leading car-sharing technology provider Yi Wei Xing. The alliance enables GM to gain insights in the car sharing market and Chinese consumers personal mobility needs. Furthermore, in 2016 GM was fined a sum of $29million by the Chinese government due to price fixing allegation that violated the country’s anti- monopoly law. (Associated Press, 2016). Moreover, GM in venturing heavily in to electric vehicles market and aiming to have 10 models of electric vehicle available for purchase in the Chinese auto market by 2020 (Associated Press, 2017)

The intensity of rivalry, which is the most obvious of the five forces in an industry, helps determine the extent to which the value created by an industry will be dissipated through head-to-head competition. The most valuable contribution of Porter's “five forces” framework in this issue may be its suggestion that rivalry, while important, is only one of several forces that determine industry attractiveness.

From the last two decades auto industry is growing more competitive. Competition from the foreign automakers like Toyota and Honda is also high. In

Potential for new entrants - The primary prevention to entrance are higher barriers within industry with the threats of new entrants as competitors (Porter, 1998).

Several factors have affected how the American auto industry now positions itself on the world market, and big changes have been made to reflect this new direction. The introduction of new technologies in vehicles, the growing market for cars in new developing markets, the impact of the industry on the environment, legislative responses and demands, as well as the increased expectations from consumers, are some of the factors. More international cars are being designed, manufactured and bought by American consumers and exported to foreign markets today than those exclusively manufactured by American companies, redefining the American auto industry, while having a positive impact on its economy. International brands accounted for 45% of total sales in the U.S. in 2013 and have now risen to 59% of the market, and continue to grow. While the amount of American cars has decreased in the local U.S. market share to international ones, the increase of foreign car production on U.S. soil has had the effect of creating new jobs for Americans both in the auto industry as well as in related new industries. The industry has seen huge growth numbers in the last few years with more growth expected.

This analysis is conducted on the Porters Five Forces theory that is crucial for effective strategic decision-making, the five forces that shape industry competition are:

Global competition in the industry: There are many vehicle manufacturers throughout the world. A few common vehicles seen in my state are GM, Chrysler, Lexus, VW, Honda, Toyota, Ford, and Jeep. Each company tries to stay ahead of the rest. Toyota, based in Japan, for example was one of the first businesses to introduce hybrid vehicles. This was a direct result of the oil embargo. After having three oil shortages automobile manufacturers are creating more fuel efficient, environmentally friendly products.

The luxury cars industry is one of the most prestigious mass-production industries in Germany. The country is recognised by many as the native land of the automobile; in fact in 1901 900 vehicles a year were already produced.

The Ford Motor Company and General Motors have greatly influenced and shaped the global automobiles industry over the 20th Century. While there are other big car-makers both in the United States and elsewhere in the globe, the two companies have been the commonest and significant players across the entire sector. This research focuses on an argument of how competition between both companies has benefited them.

In his article “The five competitive forces that shape strategy“, Michael Porter (2008) updates and extends his “five forces” framework he first introduced in 1979 and which has influenced the academic and business research for decades. He reaffirms that “THREAT OF ENTRY”, “THE POWER OF SUPPLIERS”, “THE POWER OF BUYERS”, THE THREAT OF SUBSTITUTES”, and “RIVALRY AMONG EXISTING COMPETITORS” are the forces that shape every single industry, and a thorough understanding of such forces help analyze everything from the intensity of competition to the profitability and attractiveness of any industry. The framework has two dimensions; the vertical dimension that connects

This behavior brings competitive advantages to the European luxury brands. Moreover, customers in different countries have different purchase behaviors. For instance, some countries’ customers are willing to move away from common recognized brand, because they want to purchase more exclusive products. Furthermore, because of the increasing speed of globalization, people are more likely willing to travel between different countries. These travelers will buy luxury good during their trips. In fact, Chinese tourists contributed over one third of sales in Europe. The luxury goods industry should notice to adjust the actual demand between local people and tourists in Europe

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

Luxury product sales boost in the emerging marketing like China, which has extraordinary growth and strong potential consumers for the development of luxury goods in the China market. With gradually lower and lower increase of revenue in the European countries, Louis Vuitton (abridged as LV in the following sections) commits itself to set up more stores in China. However, LV is faced with the problems of declining profits in China, which urges it to adjust its entry strategy into the China market. In this case, this report will focus on distinguishing the factors that influence LV’s development in China and

The Chinese already buy more cars than people in other countries: 13.5 million last year, compared to 11.6 million of Americans. China is on track to become the largest market for luxury goods.

1To have a thriving and growing economy you have to have a strong manufacturing base that is outputting quality goods in large quantities. In the case of the United States much of the economy in the past has been built on housing sales and the automotive industry. America 's modern automotive industry is being hurt by two things: Unionized labor and cheaper imports from Asia. Why build cars in North America where unionized automotive wages are $20+/hour when you can build them in Asia for less than $4/hour and still get the same quality? And in some cases more quality, if you want to consider the amazing durability and reliability of cars