Aniket vashishthe

IMS(A) 2022-24

Threat of New Entrant (Weak):

1. Large amount of capital required

2. High vengeance possible from existing companies, if new entrants would bring
innovative products and ideas to the industry

3. Few legal barriers protect existing companies from new entrants

4. All automotive companies have established brand image and reputation

5. Products are mainly differentiated by design and engineering quality

6. New entrant could easily access suppliers and distributors

7. It is very hard to achieve economies of scale for small companies

8. Governments often protect their home markets by introducing high import

taxes

Bargaining power of supplier (Weak):

1. Large number of suppliers

2. Some suppliers are large but the most of them are pretty small

3. Companies use another type of material (use one metal instead of another) but
only to some extent (plastic instead of metal)

4. Materials widely accessible

5. Suppliers do not pose any threat of forward integration

Bargaining power of Buyers (Strong):

1. There are many buyers

2. Most of the buyers are individuals that buy one car, but corporations or
governments usually buy large fleets and can bargain for lower prices

3. It doesn’t cost much for buyers to switch to another brand of vehicle or to start
using other type of transportation
4. Buyers can easily choose alternative car brand

5. Buyers are price sensitive and their decision is often based on how much does a
vehicle cost

6. Buyers do not threaten backward integration

Threat of Substitutes (Weak):

1. There are many alternative types of transportation, such as bicycles,
motorcycles, trains, buses or planes

2. Substitutes can rarely offer the same convenience

3. Alternative types of transportation almost always cost less and sometimes are
more environment friendly

Industry Rivalry (Very Strong):

1. Moderate number of competitors

2. If a firm would decide to leave an industry it would incur huge losses, so most
of the time it either bankrupts or stays in automotive industry for the lifetime

3. Industry is very large but matured

4. Size of competing firm’s vary but they usually compete for different consumer
segments

5. Customers are loyal to their brands

6. There is moderate threat of being acquired by a competitor