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Porters Model

The document analyzes Porter's 5 Forces model for the automotive industry in Pakistan using Pak Suzuki as an example. It discusses how each of the 5 forces affects competition. Potential new entrants face significant barriers. Buyers have strong bargaining power due to high competition between automakers and dealers. Suppliers to Pak Suzuki have developed positive relationships and deliver parts frequently. Substitute products are emerging as consumer preferences change. There is intense competition among existing automakers who try to differentiate their similar products.

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Ahsan Rana
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179 views2 pages

Porters Model

The document analyzes Porter's 5 Forces model for the automotive industry in Pakistan using Pak Suzuki as an example. It discusses how each of the 5 forces affects competition. Potential new entrants face significant barriers. Buyers have strong bargaining power due to high competition between automakers and dealers. Suppliers to Pak Suzuki have developed positive relationships and deliver parts frequently. Substitute products are emerging as consumer preferences change. There is intense competition among existing automakers who try to differentiate their similar products.

Uploaded by

Ahsan Rana
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Market Analysis

Porter’s 5 Force
The strategic business manager seeking to develop an edge over rival firms can
use this model to better understand the industry context in which the firm operates.
Here are the Porter’s 5 forces.
1. Potential new entrants
2. Bargaining power of buyers
3. Bargaining power of suppliers.
4. Threat of substitutes.
5. Industry Competition/rivalry between competitors.
1. Potential new entrants
In Pak Suzuki this can be described as
• In the New Entrant category of Porter's 5 forces, we can
see that it would be tremendously difficult for another car
manufacturer to enter into the market.
• The rate at which the industry is changing does not allow
for new entrants to come into the market very easily, and
the cash investment for a new firm to produce massive
quantities of cars is in the billions.
2. Bargaining power of buyers
• Buyers, from the strong competition inside of the market find
themselves in a very favorable position.
• Since competition is so strong between auto makers and
dealers, consumers will often do research on a vehicle before
making a purchase.
• The high quantity of dealer’s forces prices to be very
negotiable and the consumer often knows exactly what the
dealer paid for the car.
• Thus, consumers are in an enviable position: The market
supply is strong, competition between auto makers and auto
sellers is very intense, and there is no set price.
• Everything is negotiable. For companies like Pak Suzuki to
continue to compete, the quality of their offerings must be
excellent, dealership service must be strong, and they must
focus on offering consumers a product with high durability
and value.
3. Bargaining power of suppliers.
Pak Suzuki’s suppliers have been
known to be some of the most dedicated suppliers in the
industry.
By virtue of the Just-In-Time
production concept pioneered by Pak Suzuki, the auto
industry itself has seen a very positive relationship
develop between its suppliers and producers.
Suppliers are expected to make
deliveries of parts in small quantities several times a day.
Pak Suzuki, by reducing its part
inventory, has been able to speed up production costs,
save money by not letting parts sit on the shelf, and
improve its relationship with parts suppliers, which rely
on Pak Suzuki for their revenue.
4. Threat of substitutes
Consumer preference is
changing (Mini cars are being replaced by compact or
midsized cars)
Setting up integrated
manufacturing facilities may require higher capital
investments than establishing assembly facilities
Pakistan is also likely to
increasingly serve as the sourcing base for global
automotive companies, and automotive exports are likely
to gain increasing importance over the medium term
Pakistan passenger car
market is moving towards cars of higher capacity.
5. Industry Competition/rivalry between competitors
Industry competition between auto makers is fierce.
The typical
consumer, when searching for a particular vehicle is
bombarded by choices.
For example, a search for ALTO (Product of Suzuki)
yields a result of Coure (Daihatsu) with a minimal extra
amount.

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