5 Forces Analysis - China Car Rental

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5 FORCES ANALYSIS

The car rental market will be analysed taking car rental service providers as players. The key buyers will be taken as consumers and individuals using transportation services, and fuel and vehicle providers, and skilled employees as the key suppliers.

Bargaining the power of buyers: HIGH

Buyers of Car rental services in China will in this report be the individual customers who have the ability to put the firm under pressure. The individual customer will purchase a rental car out of the many companies depending on personal interest. As there are many available offerings which all have different features, the individual plays a large impact on industry players. As switching to another car rental company is simple, this gives the customers a substantial amount of power to affect the company’s margins and volumes. As customers cannot do without the product and it is extremely important for day-to-day living, this also gives customers a lot of power. Therefore, the power of buyers is high due to the ability of the customers to put an industry under pressure.

Bargaining the power of suppliers: NEUTRAL

This group does not hold as much power. The suppliers in the industry are the production companies of rental cars. There are many suppliers who are known for their high quality, such as China Auto Rental, Shanghai Anji Car Rental Service, eHi Car Rental Co Ltd. In saying this, as there are many suppliers in this industry, lots of substitutes and the ease of switching to another supplier is simple, it is evident that there is a neutral supplier power. Threat of new entrants

Car renting is gaining more popularity and prevalence nowadays in China’s big cities (www.chinacartimes.com/2010/12/05/foreign-money-flowing-into-chinese-car-rental-business/). Due to the increasing popularity, there is a high chance of entrant threats, especially from foreign companies such as Avis. According to a forecast by Roland Berger Strategy Consultants,...
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