Essay: Porters Five Forces of Competition in Automotive Industry

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Essay: Porters Five Forces of Competition in Automotive Industry

Sample Essay

Bargaining power of buyers;- the automotive industry experiences moderately high bargaining power of buyers since the industry is wholly dependent on the consumers who buy almost all of their output for them to make profit and remain afloat in the business.  Each manufacturer must thus strive to attract and maintain his customers or risk losing them to other competitors.

Bargaining power of suppliers;– this is relatively low in the automotive industry because there are very many integral parts which are used to complete the whole process of manufacturing a car and thus, many suppliers are involved.  The suppliers are quite many and they have very low power such that the manufacturers can easily switch from one supplier to the other without much effort.

Rivalry from competitors;- this is very intense in this industry since the major competitors are very closely balanced on the market.  The high competition has been attributed to lack of differentiation in the available opportunities since all the manufacturers tend to make same products, that is, all companies manufacture trucks, cars or SUVs.  The only factors which differentiate the products of one manufacturer from the rest and influence buyers include price, quality, model, durability, personal tastes and preferences.

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