Posted: February 28th, 2023

project part 2

 Please see attachment

In

2009 the American auto industry was in a dire economic state. Chrysler  was in Chapter 11, GM was on the brink of bankruptcy, and Ford’s future  was at best uncertain. The demise of the U.S. auto industry would have a  devastating impact on our national economy and specifically the  economies of Michigan and Ohio. 

Economists  occasionally use Porter’s five forces framework when making a  qualitative evaluation of a firm’s strategic position. According to  Porter, his model should be used at the industry level, defined as a  marketplace in which similar or closely related products or services are  marketed. This research paper requires the application of Porter’s Five  Forces Model to the auto industry. 

Porter’s  analytical framework consists of those forces that affect a producer’s  ability to serve its customers and make a profit. A change in any of  these five forces requires a re-assessment of the marketplace. The five  forces include:

1)
The threat of substitute products:  The existence of close substitute products (i.e., high elasticity of  demand) increases the propensity of customers to switch to alternatives  in response to price increases.

2)
The threat of the entry of new competitors:  Unless there are significant barriers to entry, profitable markets that  yield high returns will attract firms (i.e., perfect competition),  effectively decreasing profitability. 

3)
The intensity of competitive rivalry: As in the case of oligopoly markets, rivals may choose to compete aggressively, non-aggressively or in non-price dimensions.

4)
The bargaining power of customers:  The ability of customers to put the firm under pressure due to  availability of existing substitute products, buyer price sensitivity,  uniqueness of the products, etc. 

5)
The bargaining power of suppliers:  The cost of factors of production (e.g. labor, raw materials,  components, and services such as expertise) provided by suppliers can  have a significant impact on a company’s profitability. As such  suppliers may refuse to work with the firm or charge excessively high  prices for unique resources. 

References 

Porter, M.E. (1979) “How competitive forces shape strategy”, Harvard Business Review, March/April 1979. 

Porter, M.E. (1980) “Competitive Strategy”, The Free Press, New York, 1980.

Porter, M.E. (1985) “Competitive Advantage”, The Free Press, New York, 1985. 

 apply Porter’s Five Forces Model to the American  automotive industry, with a focus on the U.S. market. 

1. Cover page with a running head 2. Abstract 3. Introduction to the Auto Industry 3.1. Industry Definition 3.2. Industry Profile 3.3. Industry Market Structure 3.4. Future Outlook

4. Porter’s Five Forces Strategy Analysis as it applies to the Auto Industry 4.1. Bargaining Power of Buyers 4.2. Bargaining Power of Suppliers 4.3. Competitive Rivalry in the Industry 4.4. Threat of New Entrants 4.5. Threat of Substitutes

5. Conclusion 6. References