Essay: Automotive industry: Porter’s Five Forces of Competition Model

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Essay: Automotive industry: Porter’s Five Forces of Competition Model

Sample Essay

Threat of new entrants;– there is very small threat posed by new entrants in the automotive industry.  The industry has already reached a level known as economies of scale and it is thus very hard for any new manufacturer to compete favorably in this industry.  The capital required to start manufacturing automobiles is also quite high and this serves as a hindrance to aspiring investors.

Threat of substitute products;- there are very few substitute products for automobiles.  This includes riding bicycles, walking or using trains as a means of transport.  This are however dependent on the region in question because for instance, a person in New York might not necessarily need a car to travel as subway transportation is quite effective but in most parts of the world, automobiles provide the best means of transport.

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