Automobile, as the transportation which is used most frequently, from the first one designed by Karl Benz in 29th January 1886, the car industry has past more than 120 years. No matter the appearance, performance or economical, the standard just changed significantly. Under the global market situation, how to become more competitive and profitable is the biggest consideration the vehicle manufacturers should think about.
Porters’ 5 forces model offers 5 factors to analyse the car industry in an efficient way.
Bargaining power of suppliers
Within this industry, the competition is intensified that every manufacturer wants to get more market share with useful marketing strategies. They try to do everything to find good suppliers which can cut the cost considerably and to meet the continuously changing customers’ demands. Suppliers are important for manufacturers, without raw materials or components that the process of producing and operating cannot start. Meanwhile the competitors maybe have finished the first stage of manufacturing a car. And this will let the organization place in a passive position, more worse some market share may occupied by the competitors. A good supplier relationship will boost the success of the company. The situation changed from picking the cheapest supplier to cooperate with the suppliers to compete with the rivals. The Ford and Chrysler changed their strategy from forcing them to lower the price if not they would choose new suppliers, to keep long-term relationship with them and help them to develop the processing which can cut the cost.
Bargaining power of customers
‘Customers are central to the marketing concept. They are often fickle and have ever changing requirements, needs and perceptions, which marketers must understand, anticipate and satisfy.’(Dibb, Simkin, Pride and Ferrell., 2006, p.91) The customers now do not only care about the price or the brand, they pay more attention on the function, appearance, safety and so on. For example, Bugatti, a sub-brand of Volkswagen company which engaging in producing the fastest supercar. It’s production Veyron which can run over 400km/h and owns a price more than 2 million dollars, even with so high price that the customers still have massive interests on it and the current producing capacity can not meet the marketable demands. Only offering goods or sevices which can satisfy the consumers can get profit, and the way to maximize the profit is to keep long-term and stable relationship with customers. In other words, to obtain the life-time value of the customers.
Threat of substitutes
Today, the rapid development of technology made us to have more selections as our transportations, however car still has the unassailable position. They all have different weaknesses, no one can be convenient like car. With so giant ownership that the car industry will not vanish, otherwise many other industries will suffer. Fro instance, the millions of gas stations will shut down, the highways, streets and roads will become waste. Therefore no matter what kinds of transportations will be designed, the cars will still exist.
Threat of new entrants
Globalisation has become an unstoppable trend, no one company can monopolise the global market, the organizations are bound to face the challenges from the new comers. Compared with them, the existing companies have many advantages. Initially, the brand influence that the new comers do not have, even if they will make a big budget on advertising however sometimes the brand loyalty can not be shaked so easily and this is the impact of customer relationship management. Secondly, stable suppliers can ensure the implement of processing, but for the new entrants they may will suffer from the delay of materials or expensive prices which will all decrease the competitiveness and more worse may lose potential markets and customers.
Industry rivalry and current competitors...