Industry Analysis

1258 words - 6 pages

INDUSTRIAL ANALYSIS: AUTOMOBILE INDUSTRY-Praneeth Konduri (NSID- SRK591) Student# 11183835INTRODUCTION:Automobile industry in the North America is a very established and was the world's biggest automobile industry for many years, during the 20th century, which was started with a number of companies in the early 1900's. But, as the time passed, many companies opted out the competition and some companies merged, and finally only three companies, namely Ford, General Motors, Chrysler stayed in the competition, taking advantage over other independent makers, because of their financial stability. The industry took different shapes and went through different phases-, the depression of the 30's, ...view middle of the document...

But, for the sole new entrants to the market, it might be a bit difficult, if the companies do not have any backing from other sources for income generation. The federal government regulations are also a boon for the established companies, as meeting all those criteria, requires expertise and attention. So, overall the threat of new entrants could be placed in the range of low to medium for the existing companies.Bargaining Power of Suppliers: The automobile industry is a very complicated industry, as it comprises of many industries all together, and these industries are inter-dependent as well. The automobile car manufacturing companies does not take part in the production of the parts/ interiors of the cars. This section is taken care by part manufacturing companies, and Original Equipment Manufacturers (OEMs'). So, they act as suppliers for the industry, and the prices these companies quote, varies for different companies and different models, as it depends on the quantity of the order. The prices for manufacturing, again depends on various factors, such as the labor costs, transportation, property cost, etc. But, as there are a lot of OEM companies, the price is always competitive and the automobile companies possess an advantage over choosing the company which quotes the better price. The service industry (after sale automobile service) is also considered as a supplier, as the service is expected to be very good by the customers. The automobile manufacturing companies generally take third party help for servicing. The companies have the advantage to choose between the suppliers, and so the risk of the bargaining power of suppliers could also be placed in the range of medium to low.Bargaining Power of Buyers: The buyers in the automobile industry are the end- customers, who are the citizens and residents of the North America. There are also the distributors in between, but the buying power of the distributors varies with location. The buying power of the people of the country again depends on various factors, such as economy of the country, employment rate, percapita income of the nation, and the rise in the fuel prices to consider a few. The 2008 recession/crisis has seen a very big down fall of the sales of the automobiles in the North America. A stable economy is very much important aspect to be considered in this part of the analysis. But, again the sales hit an all-time high by this year (2014). It is projected that by the end of 2018, the North...

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