Poweerpoint

Porter’s 5-forces:

Threat of entry: Car manufacturing industry requires large start up investments and very specific knowledge.

Comment: Low level of threats of entry of new competitors.

Power of supplier: Since the main parts of many cars are built on the same ground with the purpose of economies of scale, the orders from car manufacturer to theirs’ suppliers are very substantial the suppliers cannot afford to deny or bargain too much since they might lose the complete order which would be devastating. Despite that the machines to produce all parts are also somewhat standardized for that customer which means that switching cost are present and hence give the suppliers some power.

Comment: Some level of power of suppliers since switching cost are present but that power is somewhat offset since the volume ordered is substantial the supplier cannot forgo the opportunity.

Power of buyer: The car manufacturer have two segments where one is to final consumer and the other is to retailers. The business of retailers differs widely where some companies have stores in different countries and some have stores within one country but at several locations and some have just one store. The largest retailers with the highest record of sold cars can bargain with the prices since they are seen as “large few buyers” which gives them the power of negotiating. Many retailers do not really have any switching cost since they can choose which cars to sell so if they do not get the prices that they want them are not obliged to still buy from that manufacturer. That is another power of the buyer. The only power of the smallest retailers is that they, as recently mentioned, can switch supplier quite easy. What concerns the final customers, which is us as private persons, they do not have any power towards the manufacturer since they are far too small when it comes to what they contribute in pure money terms.

Comment: The power of buyers is not that substantial but it is still...