Porter’s five forces analysis
Bargaining power of customers
Indus Motor Company has a policy of “Customer First” (IMC, 2013, p. 49). Meaning, for IMC, customers certainly matter to a very high extent, so it comes to bargaining power it is safe to say that it is not low. The amount of surveys by IMC also shows how much it values its customers. Given the trust IMC has provided Pakistani customers for them to depend on it, customer’s demand for high quality and durable vehicles (Qeemat, 2012), IMC does have some grip over as its customer base is quite loyal.
But since switching costs are not too high either, be it IMC’s biggest competitors or people using other means to avail a vehicle. It ...view middle of the document...
In the financial year alone in the category of spare parts IMC had done a business of over Rs. 25 billion (IMC, 2013, p. 63)Thus IMC is heavily depended on its local suppliers for its most sold vehicles and it plans to increase localisation. Toyota has a 3S policy for its suppliers, sale, service and spare parts; such suppliers are rated as Tier 1 suppliers. These suppliers are back bone of Toyota around the world and so are in Pakistan. It may seem that they certainly have a higher bargaining power in the market of Pakistan. But IMC’s approach of Toyota Way requires its suppliers to bring the reliability, uniqueness and quality which are its most treasured aspects in as less time and as cheap as possible (IMC, 2013). Also IMC wants suppliers who are also improving their CSR relationships. This is the reason so as to it is not feasible for everyone to be a supplier for IMC. So supplier power is hard to explain in simple black or white tones.
Threat of new entrants
Level of expertise, capital for investment, customer attraction, brand name development, rules and regulation, governmental policies, existing competitors and level of hold they have on the market, all these factors decide if entry for a new company is possible in any industry. For any automotive industry, each and every one of these is quite soaring and tough. Odds are against a new entrant. So they are not a significant threat for IMC. Reason being Toyota is a world class brand name and it will not be without a hitch for anyone to win it over in a small amount of time. Also there isn’t an automotive corporation around the world who has not used “lean production” mechanism of Toyota (The Economist, 2010). Cost of establishing a manufacturing plant is, to a large extent,...