Research Paper (undergraduate), 2004
10 Pages, Grade: A-
Intensity of Competitors
Power of Suppliers
Power of Customers
Threat of new Entrants
Threat of Substitutes
Most significant Force: Power of Customers
This paper will analyze the five competitive forces in the automobile industry. More particularly, it will be analyzed how the forces have an effect on the car manufacturer BMW. Based on this analysis, the force with the most impact on the company will be identified. Based on that, it will be described how BMW uses information systems to offset the force.
The five competitive forces model was developed in 1980 by Michael E. Porter. Porter’s five forces model suggests that competition in an industry is rooted in its underlying economic structure and goes beyond the behavior of current competitors (Porter, 1980). The stage of competition depends upon five basic competitive forces, which determine the degree of competition and the profit potential in an industry. The five forces are (a) intensity of competitors, (b) power of suppliers, (c) power of customers, (d) threat of new entrants and (e) threat of substitute products (Porter, 1980).
BMW, which stands for Bayerische Motoren Werke, has made a well-known name as a luxury car manufacturer (Bernhardt & Kinnear, 1994). The headquarters of the BMW group is in Munich, Germany, but the company is present all over the world. The company built a high brand equity over the years through continuous branding efforts and high quality products. BMW is arguably the most admired carmaker in the world and BMW products inspire near-fanatical loyalty (Kiley, 2004).
BMW is a manufacturer of luxury cars. Within this category, it is distinguished between traditional and functional luxury cars. Traditional luxury cars are mainly produced by U.S. manufacturers like Cadillac and focus on customers that want to enjoy a soft, comfortable and living room style appearance (Bernhardt & Kinnear, 1994). Functional luxury cars are represented primarily by European manufacturers like BMW and focus on customers that want the communication with the road via steering and suspension systems (Bernhardt & Kinnear, 1994). They enjoy a pin-point steering and precision suspension system that put the driver in touch with this surrounding and inform the driver of the immediate environment (BMW Corporation, 2004). Following, the impact of each of the five forces on the functional car manufacturer BMW will be analyzed.
The automobile market is at the maturity stage of the life cycle, locally and globally, due to an increased number of competitors from domestic and foreign markets. The automobile market is characterized by a low potential for market growth, but high sales and profit potential (Murtagh, 2004). The following figure demonstrates the positioning of auto manufacturers within a global context.
Academic Paper, 23 Pages
Term Paper (Advanced seminar), 22 Pages
Essay, 11 Pages
Bachelor Thesis, 49 Pages
Research Paper (undergraduate), 22 Pages
Term Paper, 18 Pages
GRIN Publishing, located in Munich, Germany, has specialized since its foundation in 1998 in the publication of academic ebooks and books. The publishing website GRIN.com offer students, graduates and university professors the ideal platform for the presentation of scientific papers, such as research projects, theses, dissertations, and academic essays to a wide audience.
Free Publication of your term paper, essay, interpretation, bachelor's thesis, master's thesis, dissertation or textbook - upload now!