Analysis Of Porter's Five Forces Analysis Auto Industry

Porter’s Five Forces Strategy Analysis as it Applies to the Auto Industry

Bargaining Power of Buyers The bargaining power of buyers has been increasing in the American auto market over recent years. I think that this is first due to the fact that due to the recent local and global economic woes would be buyers are much more reluctant to make the big purchase and sign up for a new car any new car in fact. Also, the market has stiff completion and the competitors are producing relatively the same item which makes it difficult for the Detroit big three to differentiate themselves and their products effectively from the crowed. Confidence in American made cars is not as high as it once was either. General motors for example resorted to a long

The balance of power is clearly in favor of the big Detroit auto firm firstly because they have economy of scale, producing thousands upon thousands of cars and trucks each month. Secondly, there is the fact that American auto consumers are very fickle; and what is in vogue this year will not be next year. This poses a very immediate issue for the big three auto producers; however, the trickledown effect can be even more magnified and significant for the parts producer near you. Because to not meet all the expectations and demand of the given giant auto firm will simply cause them to contract for the part from some other producer in short order, possibly even one from overseas or just next door in Mexico. This ultimatum often proves the death of small town factories in fact. Hence the nick name of the entire region around Detroit is the

Hyundai-Kia continues to grow and expand its product sales by offering dependable and affordable compact cars and SUVs with 100,000 mile warranties for example (Uzwyshyn 2013). And while the traditional barriers such as technology and capitol or managing and marketing skills limit competition and new entries. New potential threats to the Detroit big three’s market share loom in never before realized corners of the world like India and even China. In both nations right now domestic auto production is growing at a rapid annual rate and demand continues to be high for automobiles. In fact the increasing demand has sparked industrial development; provided job; and improved the infrastructure where the autos are manufactured (Kearney 2013). This push toward growing industries in India and China which produce practical and affordable compact cars will not limit sales only to those local regions. Instead, over time these new manufacturing centers will be exporting their products throughout the entire world. At which time the big three from Detroit will face stiffer completion in three geo-realms, first there in India and China, next throughout the developing Asian market and possibly world market and finally here at home in America potentially. Yes, soon not only will you see tiny Fiat