Five Forces

Topics: Strategic management, Toyota, General Motors Pages: 4 (1021 words) Published: March 23, 2013
Porter’s Five Forces Analysis

Diagram 1 Porter’s five forces model (source from Business Resource Software, Inc.)

The Porter’s five forces model will be used to evaluate information system and automobile industries.

Determinants of Entry
By entering into car manufacturing market is very costly and risky as the initial costs required a large capital investment on technologies, economics of scale and accessibility to distribution channels has restricted the entry of new entrant to the industry. Toyota is a popular brand and constant market presence in different sectors with largesize that allows Toyota to have a competitive advantage over the new entrants in the automobile industry (Toyota Motor Co. 2013). An automotive manufacturing facility is very specialized and probably unable be tooled in the event of failure or malfunctioning. Although these barriers are substantial, established companies are entering into the industry through partnership or merger with other companies (Donald et al., 2005). 

However, a domestic establish with limited awareness in the new market such as Asia, Africa and South America have the likely of rival between a public base and global organization that had monopolized in these markets, although they know the barriers to enter into the market is high. Determinants of Supplier Power

In automobile industry, the suppliers are likely to be minor than an organization and therefore tend to sell to various automakers. The network or suppliers and manufacturer are diversified, as they provide essential elements for car assembly and nearly all of the automakers rely on the supplier's timely process and stellar quality. Both of them then form into long-term contract. However, if the manufacturers are able to find another supplier that given a lower price with the same quality compare to the existing supplier, they will automatically switch into the new supplier and purchase the goods from them. Therefore, the suppliers do not own...
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