Response Comments – After posting your initial response to the question, begin making comments to your peers. A minimum of two comments made on two different days must be posted in the discussion for a passing grade. The comments must be early enough before the end of the week to allow for replies.
Unit 2: Discussion 1 Peer Response
Response Comments- After posting your initial response to the question, begin making comments to your peers. A minimum of two comments made on two different days must be posted in the discussion for a passing grade. The comments must be early enough before the end of the week to allow for replies.
Felix Doh (Student 1)
Over the past two years, the global automotive industry has experienced swift and severe impacts from the Covid-19 Pandemic.
Some of the impacts that the Covid-19 had on the global Auto Includes but are not limited to a large-scale manufacturing interruption across Europe, disruption in Chinese parts exports, and the closure of assembly plants in the United States.
These impacts also place intense pressure on the Automotive industry, which was already coping with a decline in demand. (Deloitte.com, n.d.).
The automotive industry has undergone a series of recent changes due to changes in consumer taste and technological advancement.
Apart from great technology and design, now the focus is on passenger safety and environmental friendliness. Pretty soon, it will be an era of autonomous vehicles.
Porter’s five forces analysis can provide companies with an invaluable insight into their business competition and how much power they hold in the market. (Abhijeet, 2022)
In this discussion, we will analyze two of Porter’s five forces that affect the auto industry.
Bargaining power of Suppliers.
Numerous suppliers in the automotive industry supply them with materials needed to manufacture vehicles.
Five of the world’s biggest suppliers are Bosch, Denso, Magna, Continental and ZF Friedrichshafen.
These suppliers strive to maintain control in bargaining through rising prices or reducing the quality of goods for cost efficiency.
Suppliers gain much bargaining power when a few companies dominate the industry, which gives them leverage in negotiating costs and prices. (Torres, 2020).
For Example, the Covid -19 pandemic lockdown resulted in a shortage of semiconductors, a critical component of the modern vehicle.
The semiconductor shortage negatively affected many auto manufacturers and just shut down production. The implication of this shutdown can be seen today in our local car dealership, as it is becoming difficult to go to the dealership and pick up a new car without preordering.
The threat of new entrants
As a result of the enormous startup investment required to establish a car brand, it is usually tricky for the new entrant to enter the automotive industry. Considerable investment will be needed to set up the manufacturing facilities and distribution network and hire skilled staff.
The level of competition from existing companies in the industry is another significant barrier to new entrants.
The Eight Environment trends of Toyota.
As a loyal customer of the brand because of its dependability and low maintenance cost, I choose to highlight the eight general environmental trends of Toyota Motors in this discussion.
Technology remains a vital force that shapes and nurtures the future. Toyota has made huge investments in technological advances and producing high-quality products. In the research and development wing, Toyota invested $9.8 billion by 2009.
The brand has been credited for coming out with the first hybrid car (Prius), which has revolutionized the auto industry because of winning the award of the twelve engines of the year. (UKEssays.com, 2018).
Global Competitive Forces.
Toyota Motor Corporation faces the significant effects of external factors such as competitors in its industry environment.
As a Japanese brand operating here in the United States of America, Toyota faces fierce competition from major U.S auto Manufacturers such as GMC, Ford, and Chevrolet, to mention but a few who continuously come out with new technology.
With new emerging technologies and competitors fighting for more and more market share Toyota is confident that the competitive rivalry in the Auto industry is moderate to high for Toyota.
Deloitte.com. (n.d). Understanding COVID-19’s impact on the automotive sector. https://www2.deloitte.com/global/en/pages/about-deloitte/articles/covid-19/understanding-covid-19-s-impact-on-the-automotive-sector.html.
Abhijeet, Pratap. (February 2, 2022). Automotive Industry Five Forces Analysis. https://notesmatic.com/automotive-industry-five-forces-analysis/
Torres, Xavier, (March 31, 2020). The Automotive Industry and Porter’s Five Forces Model in Action. https://www.linkedin.com/pulse/automotive-industry-porters-five-forces-model-action-torres-cissp
UKEssays. (November 2018). Analyses Of Toyota Motors Internal and External Environment Marketing Essay. Retrieved from https://www.ukessays.com/essays/marketing/analyses-of-toyota-motors-internal-and-external-environment-marketing-essay.php?vref=1
Iprita Bhattarai (Student 2)
Porter’s five competitive forces are – rivalry among existing competitors, bargaining power of buyers, the threat of substitutes, bargaining power of suppliers, and threat of new entrants. The two forces I’ll be focusing on are rivalry among existing competitors and the threat of substitutes.
Threat of Substitutes– “The threat of substitutes is the availability of other products that a customer could purchase from outside an industry” (Bragg, 2022). Taking Uber as an example, we know their immediate threat is Lyft and some local taxi services. The significant number of taxis in the various town themselves can be a reason to limit Uber from increasing their prices in those areas. When customers can easily switch between two product, threat of substitutes increase, and since Lyft is also easily accessible, Lyft, however, has some competitive advantage over some of the lower costs, making this one of Uber’s greatest threats.
Rivalry among existing competitors– Uber’s direct competition in the U.S. is Lyft. Apart from this, some of their international competitors include, Didi, Chuxing, Curb, Ola, Grab, and Careem. Uber’s competitive advantage is its access to resources, so taking that into an advantage, Uber must lower their cost to avoid any customers being charged more than its competitors. “Given Uber’s supremacy in the transport service system, competition is a weakening force” (N.D., 2019) for them.
The two factors that can directly affect Uber are technological change and population demographics. No doubt, that Uber has been a huge innovation in digital transformation, but several competitors have emerged since its establishment. One of the greatest strengths of Uber is its performance, therefore, it must continue to be stable and deliver the fastest response, in order to survive any technological changes. Similarly, population demographics are a huge environmental factor that can affect Uber and the company in general. With having an international presence too, it is important for them to understand the power their fellow competitors such as Didi, Chuxing, Curb, Ola, Grab, and Careem have in their home country.
Bragg, S. (2022, April 29).Threat of substitutes definition. AccountingTools. Retrieved June 15, 2022, from https://www.accountingtools.com/articles/threat-of-substitutes
N, D. (2019, June 17).Porter’s five forces analysis on Uber: Uber Porter’s five forces analysis. Top Academic Writers. Retrieved June 15, 2022, from https://topacademicwriters.com/porters-five-forces-analysis-on-uber/
Edited byIprita Bhattaraion Jun 15 at 10:35am
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