Automotive Industry in Slovakia

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2. Describe the industry and explain why you have chosen that one (Porter’s five forces).

The automotive industry is a big term; indeed it is used to describe a large range of companies and organizations engaged in the development, design, manufacture, marketing, and selling of motor vehicles. The automotive industry is one of the world’s most important economic sectors in terms of revenue. The automotive industry is one of the biggest industries in Slovakia with big manufacturers such as Volkswagen, PSA Peugeot- Citroën and Kia. Porter's Five Forces are used to examine the attractiveness of an industry. It is done by observing five forces which influence that industry. The five forces are;

1. The threat of new entrants
2. The bargaining power of customers
3. The threat of substitute products
4. The bargaining power suppliers have
5. The intensity of the competitive rivalry

1. The threat of new entrants:

This is generally a very low threat. Factors to examine for this threat include all barriers to entry such as upfront capital requirements, brand equity, legislation and government policy and the ability to distribute the product. A new entrant will also have to adapt he’s cars to the customers habits, e.g. bigger cars in the US than in Europe.

2. The bargaining power of customers:

There are so many cars to choose nowadays. The main factors that affect the customer’s choice to purchase a car or not are: * The appearance
* Quality
* Price
* Environmental effect

Customers like to have the latest brand new looking car on the market. The quality of the car will be an important issue in the choice. The car has to be efficient, which means a safe and less consuming car. Due to all the competitors you find in the market, customers will be able to purchase a cheaper car at a good level of quality. Car manufacturers are also building environmental friendly cars; indeed, they have to take into consideration all the...
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