The framework allows a business to identify and analyze the important forces that determine the profitability of an industry. It is these forces that determine how much competition will exist in a market and consequently the profitability and attractiveness of this market for a company.
How loyal are customers to your brand Price sensitivity How well differentiated your product is Availability ofsubstitutes Having a customer that has the leverage to dictate your prices is not a good position. Bargaining power of suppliers This relates to what your suppliers can do in relationship with you.
How strong is the position of sellers? Are there many or only few potential suppliers?
Is there a monopoly? Do you take inputs from a single supplier or from a group? Can you easily switch from one supplier to another one?
Are there other suppliers with the same inputs available? Michael Porter's model of Five Forcescan be used to better understand the industry context in which the firm operates.
Porter's Five Forces model is a strategy tool that is used to analyze attractiveness of an industry structure.
Porter's Five Forces modelviews thebusiness fromoutside. It focuses on assessing competitive position within industry. Porter's Five Forces model in the internal view. Automobile Industry The auto manufacturing industry is considered to be highlycapital and labor intensive.
The major costs for producing and selling automobiles include: Labor - While machines and robots are playing a greater role in manufacturing vehicles, there are still Five forces model of two wheeler industry labor costs in designing and engineering automobiles.
Advertising Each year automakers spend billions on print and broadcast advertising, furthermore, they spent large amounts of money on market research to anticipate consumer trends and preferences. The auto market is thought to be made primarily of automakers, but auto parts makes up anotherlucrative sector of the market.
The major areas of auto parts manufacturing are: Original Equipment Manufacturers OEMs - The big auto manufacturers do produce some of their own parts, but they can't produce every part and component that goes into a new vehicle.
Companies in this industry manufacture everything from door handles to seats. Replacement Parts Production and Distribution - These are the parts that are replaced after the purchase of a vehicle. Air filters, oil filers and replacement lights are examples of products from this area of the sector.
Rubber Fabrication - This includes everything from tires, hoses, belts, etc. In auto industry, a large proportion of revenue comes from selling automobiles.
The parts market is even more lucrative. Offering lower financial rates than financial institutions, the car company makes a profit on financing.
Extended warranties also factor into the bottom line. Greater emphasis on leasing has also helped increase revenues. The advantage of leasing is that it eases consumer fears about resale value, and it makes the car sound more affordable. From a maker's perspective, leasing is a great way to hide the true price of the vehicle through financing costs.
Car companies, then, are able to push more cars through. Unfortunately, profiting on leasing is not as easy as it sounds. Leasing requires the automakers to accurately judge the value of their vehicles at the end of the lease, otherwise they may actually lose money.
Indian Automobile Industry The Indian automobile industry is the tenth largest in the world with an annual production of approximately 2 million units. Indian auto industry, promises to become the major automotive industry in the upcoming years and the industry experts are hopeful that it will touch 10 million units mark.
Indian automobile industry is involved in design, development, manufacture, marketing, and sale of motor vehicles. There are a number of global automotive giants that are upbeat about the expansion plans and collaboration with domestic companies to produce automobiles in India.
The heavy motors including buses, trucks, auto rickshaws and multi-utility vehicles are manufactured by Tata-Telco, Eicher Motors, Bajaj, Mahindra and Mahindra, etc. The passenger car segment in the Indian auto industry is growing by percent.
Commercial vehicle will grow by 5.
India is a potential emerging auto market.PEST & Porter’s five force analysis on two wheeler industry 1. Two Wheeler Industry (cc - cc two wheelers) 2.
Introduction • India is the second largest producer of two wheelers in the world. The country stands next to China and Japan in terms of production and sales respectively.
The Five Forces determine the competitive structure of an industry, and its profitability. Industry structure, together with a company's relative position within the industry, are the two basic drivers of company profitability. The five forces model was developed by Michael E. Porter to help companies assess the nature of an industry’s competitiveness and develop corporate strategies accordingly.
The framework allows a business to identify and analyze the important forces that determine the profitability of an industry. Apply the Porter's five forces model on Automobile Industry and analyse the attractiveness of the Industry for Investment purpose Evolution of Porter's Five Forces Model Five forces is a framework for the industry analysis and business strategy development developed by Michael E.
Porter of Harvard Business School in Porter’s Five Forces Model: an overview Porter’s Five Forces Model is a structured framework for analyzing commerce and business establishment. It was formed by Michael E. Porter of the Harvard Business School between and the mid ’s.
Five forces Analysis of Two-wheeler industry TWO WHEELER INDUSTRY Business Model of 2 wheeler Industry in India As shown above, the business model is formulated as input process output. For a two wheeler industry, The inputs to the OEM constitutes of 1. Import of parts: the basic ingredients for model building are the parts such as .