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Porter's Five Forces In Auto Term Paper

3.3 Threat of New Entrants

It is extremely difficult for new entrants penetrate the auto industry because of the existing high level of brand loyalty. Nevertheless, the few popular overseas firms and entered the American auto industry easily. For example, Honda Motors entered Ohio by opening a new office. This marked the beginning of a major stiff competition in the industry. Foreign entrants have expanded leading to decreased markets for American auto companies (Rubenstein, 2011).

3.4 Bargaining Power of Buyers

In the current marketplace, consumers have been given various options, models, and brands to make their selection. However, various factors affect the buying decisions of consumers. They include price, appearance, and effect on the environment. Customers are always seeking for nice looking and new cars. For the rich, car loving segment, they have a tendency of buying the most attractive and new released models. Besides this, another important issue is the quality of cars. A good car must be efficient meaning ensured safety, running fast and saving gas. Additionally, because the industry has many competitors, consumers enjoy a wide range of options at reasonable prices with good quality. Further, due to environmental factors such as global warming, most auto manufacturers are making their cars in a unique way that ensures the environment is protected. Looking at various consumer lifestyles, people are choosing to buy cars in different ways (Beecroft, 2008).

3.5 Threat of Substitutes

Up to this point, it is evident that companies have introduced many transportation substitutes. They include trains, buses, subways, and bicycles. Evidently, these substitutes have enhanced the lifestyles of most consumers living in urban areas. On the contrary, some people living far from cities have to use cars as the only means of transport.

3.6 Competitive Rivalry in the Industry

There is high competition between existing auto companies. This stems from the existence of too mush alternatives in the marketplace. For this reason, the auto industry has likely to realize reduced profits if the high cost of competition does not change.

4. 0 Conclusion

As much as the U.S.

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unemployment and easy credit has been the driving force of the American auto sales. Experts expect that the pace of growth will stabilize becoming moderate in the future. This follows the pre-requisite of providing products with attractive specifications and great features to maintain competition and make use of the increasing demand, precisely as the outlook of European market remains dull (Rubenstein, 2011).

References

Beecroft, D. (2008). History of the American automobile industry. Toronto: CCH Canadian Limited.

Cooney, S., & Yacobucci, B.D. (2009). U.S. automotive industry: Policy overview and recent history. New York: Nova Science Publishers.

Porter, M.E. (1979) "How competitive forces shape strategy," Harvard Business Review, March/April 1979.

Porter, M.E. (1980) "Competitive Strategy," The Free Press, New York, 1980.

Porter, M.E. (1985) "Competitive Advantage," The Free Press, New York, 1985.

Rubenstein, J.M. (2011). Making and selling cars: Innovation and change in the U.S. automotive industry. Baltimore: Johns Hopkins University Press.

Weintraub, S., & Sands, C. (2008). The North American auto industry under NAFTA. Washington, D. C: Center for Strategic and International Studies.

Yates, B.W. (2010). The decline and fall of the American automobile industry. New York: Empire Books.

Sources used in this document:
References

Beecroft, D. (2008). History of the American automobile industry. Toronto: CCH Canadian Limited.

Cooney, S., & Yacobucci, B.D. (2009). U.S. automotive industry: Policy overview and recent history. New York: Nova Science Publishers.

Porter, M.E. (1979) "How competitive forces shape strategy," Harvard Business Review, March/April 1979.

Porter, M.E. (1980) "Competitive Strategy," The Free Press, New York, 1980.
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