Porter’s Five Forces For The Automobile Industry; The Wine Industry | Discussion

Question 1

Write 1 paragraph on each of the 5 forces of any industry of your choice.  The industry selected for the analysis is automobile industry.

Porter’s Five Forces

  • Competitive Rivalry within an Industry

New entrants can use the strategy of price reduction to gain market share. The competitive rivalry within the industry requires addressing the needs of customers:  reasonable prices, effective product differentiation, and the proper application of distribution options, as well as strong relationship with suppliers. The key rivals are BMW, Ford, Audi, Mercedes Benz, Lexus, Infiniti, Acura, Toyota, Volkswagen and others.

  • Bargaining Power of Suppliers

The bargaining power of suppliers is relatively low for the reason of a large number of potential suppliers of the key components. Recently, the supply system has been moved to specialization due to the use of innovative technologies that facilitate improvements in product development (Karlsson, 2013).

  • Bargaining Power of Customers

The bargaining power of customers is moderate. The major product features valued by customers and relevant factors that affect purchasing behavior include price, product quality, product image, brand recognition, and environmental impacts. A large number of companies offer similar products at similar prices.

  • Threat of New Entrants

The unique characteristics of automobile industry influence the level of barriers to entry. There is a need for using the proper mechanisms to succeed in the market: facilities, tools, equipment, qualified personnel, new technology, channels of product distribution and others. The threat of new entrants is relatively low because new entrants need to deal with the increased competition, industry and customer demands.

  • Threat of Substitute Products

The threat of substitutes is moderate. Although the products are different, the major purpose is meet customer needs and demands. Product differentiation is crucial in the automobile industry. Automobiles have similar designs and models, but their technical features differ. There is the threat of substitute products because of functional similarity, as well as similar price and design (Guerzoni, 2013).

Question 2

Write about the intensity of rivalry and the power of buyers (consumers) in the wine industry, as described in the “wine wars” case.  Cite specific details from the case with regard to those two of the five forces.

In the “wine wars” case, the analysis of two forces, namely the intensity of rivalry and the power of consumers, shows that the wine industry is highly competitive. France and Italy have become the key competitor in the global wine industry and maintained its leading position for a long time. Due attention was paid to the quality of wine products, the ability to enter international markets, strong brand recognition, huge experience in wine manufacturing, standardization and product differentiation. The proper sources of competitive advantage allowed the major competitors to maintain their exports: cultural traditions, high level of expertise in wine manufacturing and geographical location. The traditional wine manufacturers

As a matter of fact, the wine wars initiated between the wine manufacturers of the old wine world (France, Germany, Spain, and Italy) and the wine manufacturers of the new wine world (China, Argentina, US, Chile, and Australia) led to changes in the competitive market. The old wine world failed to address the demands of customers because of poor marketing, the lack of technology innovations and high prices, while the new wine world made it possible to ensure cost reduction to meet the demands of customers. According to researchers, “market power shifted from the individual producers (supply) to the negociants (demand), particularly as the negociants developed brand-like reputations”(Veseth, 2011, p. 172).

Besides, the intensity of rivalry was supported by the decreased shipment costs, which allowed the companies from China, Argentina, US, Chile, and Australia to enter new markets and attract new customers. Free trade law facilitated the distribution of products (Garlough, 2004). In general, the case shows that new marketing approaches are more effective that traditional approaches used in the wine industry. Two forces (the intensity of rivalry and the power of consumers) influence the development of wine industry. The fundamental changes in the competitive market led to changes in consumption and distribution strategies.

References

Guerzoni, M. (2013). Product Variety in Automotive Industry: Understanding Niche Markets in America. Springer Science & Business Media.

Garlough, J. M. (2004). “Weighing In on the Wine Wars: What the European Union Can Teach Us About the Direct Shipment Controversy,” William & Mary Law Review, 46(4): 1533-1543. 

Karlsson, C. (2013). “Supply system and vertical integration,” in Managing Innovation and Change, ed. by Sven B. Lundstedt and Thomas H. Moss. Springer Science & Business Media.

Veseth, M. (2011). Wine Wars: The Curse of the Blue Nun, the Miracle of Two Buck Chuck, and the Revenge of the Terrorists. Rowman & Littlefield Publishers.

The terms offer and acceptance. (2016, May 17). Retrieved from

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016.

[Accessed: March 28, 2024]

freeessays.club (2016) The terms offer and acceptance [Online].
Available at:

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]

"The terms offer and acceptance." freeessays.club, 17 May 2016

[Accessed: March 28, 2024]
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