This paper will analyze the five competitive forces in the automobile industry. More particularly, it will be analyzed how the forces have an effect on the car manufacturer BMW.
Porter analysis of BMW
Based on this analysis, the force with the most impact on the company will be identified. Based on that, it will be described how BMW uses information systems to offset the force. The five competitive forces model was developed in by Michael E. The stage of competition depends upon five basic competitive forces, which determine the degree of competition and the profit potential in an industry.
- The Birth of the Museum: History, Theory, Politics (Culture: Policy and Politics).
- Threat of Substitutes;
- Theme from Impromptu Op. 142 No. 3 Bb Major - Piano?
- Competitive forces BMW. An analysis of the effects.
- Timmy and the Knick Knocker Ring.
The five forces are a intensity of competitors, b power of suppliers, c power of customers, d threat of new entrants and e threat of substitute products Porter, The headquarters of the BMW group is in Munich, Germany, but the company is present all over the world. The company built a high brand equity over the years through continuous branding efforts and high quality products. BMW is a manufacturer of luxury cars.
Within this category, it is distinguished between traditional and functional luxury cars. Traditional luxury cars are mainly produced by U. They enjoy a pin-point steering and precision suspension system that put the driver in touch with this surrounding and inform the driver of the immediate environment BMW Corporation, Following, the impact of each of the five forces on the functional car manufacturer BMW will be analyzed.
Five Forces Analysis - Luxury Car Industry - Audi vs. BMW
The automobile market is at the maturity stage of the life cycle, locally and globally, due to an increased number of competitors from domestic and foreign markets. The automobile market is characterized by a low potential for market growth, but high sales and profit potential Murtagh, The unique inputs do not only make the supplier dependent on the firm, but can be reciprocated from the firm to the supplier. Due to the differentiated inputs that each luxury car manufacturer requires and provides, it would not be easy or quick for them to switch between suppliers; this would incur many switching costs.
After answering several questions pertaining to the bargaining power of suppliers, our group has found that there is a moderately low threat of the suppliers. This conclusion is reinforced by the facts: New firms or manufacturers trying to enter this industry may find it very difficult to try and capture some of the market share because some of the existing brands and reputations that has been well established.
- Quitas DayScare Center 2 (The Cartel Publications Present)!
- Learn To Crochet?
- Bmw Five Forces;
Firms that are already established within the industry have a significant advantage over the newcomer because of the firsthand experience and knowledge they have acquired. For the new entrant they must establish themselves as a reputable manufacturer that can differentiate itself in a new way compared to the already existing firms. From the consumer perspective, the newcomer must also show a low switching cost compared to their competitors in order to gain attention; the consumer is taking an inherent risk by moving to a new company that may not have a verified reputation yet so the lower switching cost reduces the risk somewhat.
Recently, there has been a new entrant to the luxury car industry: Hyundai has already established itself in the economy car industry as a reputable Korean manufacturer and has distribution networks to go along with that. Although Hyundai is new to the industry and lacks brand power, it is making up for its shortcomings with some very unique and innovative marketing ideas. Rather than competing with Mercedes and Acura dealerships to see who has the most granite, Hyundai is bringing the consumer the car if they want to test drive it or buy it or they will come and get it from the customer if it needs servicing Special Report: Luxury Automotive Outlook, Based on the assessment in our analysis, we have found that there a high threat for substitution for luxury cars.
As shown in the charts at the end of the document, there are a vast amount of options for the consumer to choose from if they are not satisfied with their current brand. The probability of a competitor having a similar product, based on performance and standard features, is relatively high due to the number of firms established in the market.
Many of these products also have similar price tags if they are relatively comparable.
Forgot Password?
From a statistical standpoint though, the majority of people would rather buy something that they know is quality and has a reputable name behind it. The luxury car industry is not rapidly growing, but is on the upside for growth. Those competitors also have an enormous target audience in market. These includes Audi, Mercedes Benz etc. These all are creating an immense and powerful competition for the BMW Dudovskiy, With the technology advancement, the demands and market for the hybrid cars is increasing day by day.
Porter Five Forces Analysis of BMW
So it is a positive point for BMW as they are manufacturing cars in this category which are friendlier to the environment and reducing the transportation issues. Whereas the competitors in case of hybrid cars are left behind including Toyota etc. In order to capture a large target audience and more customers, techniques of marketing and advertising are used and a huge amount of budget is spare for the cause of influencing the customers.
Nowadays the clients buy anything on the basis of the reviews and the comments which are provided by the users in magazines and websites.
They are looking forward to the rating of the product before purchasing it. These reviews comprise of the information about the automobiles and the segments from which they are made of. These also explain the factors such as pricing, features and models that are the key factors which influence the choice of the customers while purchasing a car. All the resources which are providing such knowledge to the customers are playing important role in increase negotiating power of the customers admin, Hence in order to overcome such factors, the company creates striking catalogues and broachers to capture more audience.
Suppliers also play a significant role in the production of the goods in automobile industry. The organization requires crude materials, labor, spare parts and other facilities to produce cars.