PORTERS FIVE FORCES MODEL
FOR FOUR WHEELER COMPANY TATA NANO
1. INTRODUCTION TO PORTER’S FIVE FORCES MODEL. 2. INTRODUCTION TO Tata Nano. 3. PORTER’S FIVE FORCES FOR HERO HONDA. 4. THREAT OF NEW COMPETITORS. 5. RIVALRY AMONG EXISTING FIRM IN INDUSTRY. 6. THREAT OF SUSTITUTES. 7. SUPPLIERS BARGAING POWER OF CONSUMERS. 8. BIBLIOGRAPHY.
1. PORTER'S FIVE FORCES
Diagram of Porter's 5 Forces
Threat of Entry Rival
Importance of volume to supplier Impact of inputs on cost or differentiation Switching costs of firms in the industry Presence of substitute inputs Β rand reputation Geographical coverage Product/service level quality Relationships with customers Bidding processes/capabiliti es
Economies of Scale. • Number and size of Product Differentiation. firms Capital Requirements. • Industry size and Cost Disadvantages trends Independent of Size. • Fixed v variable Government policies. cost bases Industry profitability. • Product/service ranges • Differentiation, strategy
r y , e g :
Bargaining leverage Buyer volumes, JIT scheduling Buyer information Brand identity Price sensitivity Threat of backward Integration Product differentiation Buyer concentration vs. industry Substitutes available Buyers' incentives
• number and size of firms • industry size and trends • fixed v variable cost bases • product/service ranges • differentiation, strategy • number and size of firms • industry size and THREAT OF trends SUBSTITUTES • fixed v variable Switching costs cost bases • product/service Buyer inclination to substitute ranges Price-performance trade-off of substitutes • differentiation, strategy
A brief Information about the product :
The Tata Nano is a rear-engine, four-passenger city car built by Tata Motors, aimed primarily at the Indian market. The car is very fuel efficient, achieving around 78mpg on the highway and around 92 in the city. It was first presented at the 9th annual Auto Expo on 10 January 2008, at Pragati Maidan in New Delhi, India. Nano had a commercial launch on March 23, 2009 and, a booking period from April 9 to April 25, generating more than 200,000 bookings for the car. The sales of the car will begin in July 2009, with a starting price of Rs 115,000 (rupees), which is approximately equal to UK£1,467 or US$2,421 as of June 2009. This is cheaper than the Maruti 800, its main competitor and next cheapest Indian car priced at 184,641 Rupees. Tata had sought to produce the least expensive production car in the world — aiming for a starting price of Rs.100,000 (approximately US$2,000 in June 2009).
FORCES OF PORTER’S MODEL: The threat of the entry of new competitors: Profitable markets that yield high returns will attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry. Unless the entry of new firms can be blocked by incumbents, the profit rate will fall towards zero (perfect competition). 1.
• The existence of barriers to entry (patents, rights, etc.) The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new firms can enter and nonperforming firms can exit easily. • Economies of product differences • Brand equity • Switching costs or sunk costs • Capital requirements • Access to distribution • Customer loyalty to established brands • Absolute cost advantages • Learning curve advantages
• Expected retaliation by incumbents • Government policies • Industry profitability; the more profitable the industry the more attractive it will be to new competitors 2. The intensity of competitive rivalry: For most industries,
the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. • Sustainable competitive advantage through innovation • Competition between online and offline companies; click-and mortar-v- slags on a bridge • Level of advertising expense • Powerful...