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University Questions

University Questions. “Long Term Success if an enterprise depends upon how it handles the 5 forces enumerated by Porter”. Discuss this wrt Porter’s 5 forces Model.

harlan-hawkins
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University Questions

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  1. University Questions • “Long Term Success if an enterprise depends upon how it handles the 5 forces enumerated by Porter”. Discuss this wrt Porter’s 5 forces Model. • “Competition in any industry is shaped by 5 forces highlighted by Porter. Hence understanding of these forces is crucial for strategy formulation”.Comment. • “Long run success of a company is largely dependant upon structural attractiveness of Industries in which they compete”. Evaluate this stmt in context of Porter’s 5 forces model& elaborate each force as a determinant of competitive environment for a company. Illustrate . • Liberalization and Globalization has virtually changed the industry scenario for financial services. Perform external analysis for State Bank of India covering environmental scanning and 5 forces model. • Global players are entering Indian Consumer Durables market in a big way with heavy investment. How can they achieve sustainable competitive advantage given the fact that they have different levels of entry? Can they apply Porter’s Model of generic • Same for Automobile industry.

  2. Influencing the Power of Five Forces • Reducing the Bargaining Power of Suppliers • Reducing the Bargaining Power of Customers • Reducing the Treat of New Entrants • Reducing the Threat of Substitutes • Reducing the Competitive Rivalry between Existing Players

  3. Entry of Global Competitors in the Automobile Industry – An Analysis based on Porter’s 5 forces Model Competition from Substitutes • Inadequate Public Transportation System • Developmental Stage of Electric Cars The lack of adequate public transportation system coupled with the fact that the electric or hybrid cars are still in the developmental stage means that the Indian car industry faces minimal competition from substitutes.

  4. Threat of New Entrants • Economies of Scale - capital-intensive industry • Government Policy - license-raj rsegime of the Indian government • Huge Capital Costs – require deep pockets • Absolute Cost Advantages - Maruti's presence Although liberalization of the Indian economy has reduced the impact of government policy as an entry barrier, the car industry still enjoys high entry barriers due to huge capital costs involved in setting up efficient plants and numerous cost advantages enjoyed by Maruti. The recent pull-out of Peugeot is an example that even a global automobile company could find it extremely difficult to operate in India if it faces labor trouble and problems with its joint venture partner.

  5. Rivalry between Established Competitors • Highly Concentrated Industry • Diversity of Competitors • Product Differentiation - a perceptible shift towards "cars" being treated as a commodity rather than as a consumer good • Excess Capacity and Exit Barriers • Increase in Working Capital Needs The competition between firms in the car industry is expected to intensify considerably as newer companies will start reducing Maruti's dominance of the market. The expected significant over-capacity in the industry, increasing working capital needs, and high exit barriers coupled with low differentiation between models especially in the economy segment will put downward pressure on prices and profitability of companies.

  6. Bargaining Power of Buyers • Buyers' Price Sensitivity • Relative Bargaining Power s • Availability of Easy Financing • Used Car Market The entry of the global car manufacturers has transferred the balance of power into the hands of the buyer. The Indian car buyer is not only extremely price conscious, but also wants the highest value and service. Huge dealerships, member clubs, mobile squads, and replacement vehicles are just some of the sops being offered to the customer. The availability of cheap financing and maturing of the used car market will also increase the choices for the consumers. With many new models waiting to be launched, the Indian car buyer will only have more power to choose and dictate terms to the dealer.

  7. Bargaining Power of Suppliers • Diminishing Supplier Power Supplier power in the automobile industry will diminish greatly in the coming years due to the large number of competing suppliers, threat of cheaper and better-quality imports, and an increasing trend towards reduction of a car company's vendor base.

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