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The analysis of the modern automobile industry using Porters Five forces model helps to reveal central factors impacting its evolution. Concerning the threat of new entrants, the three most important aspects are political forces within countries affecting the markets development and introducing new regulations, taxation policies, and congestion safety (Potter 2017). These aspects shape the further evolution of the industry and its perspectives. Regarding Porters model, the high intensity of the given force can be admitted. In such a way, it is critical to consider these elements for central actors to act in accordance with existing regulations.
As for the threat of substitutes, there are three aspects that underpin this force. These are pollution and sustainable policies, the appearance of so-called intelligent vehicles, and the development of public transportation systems (Potter 2017). The given three factors shape investors decision-making and result in the appearance of particular tendencies shaping the development of the automobile industry (Potter 2017). The level of this forces intensity can be characterized as high because it directly affects the functioning of corporations and triggers the appearance of their responses. It also means that vehicles should meet new requirements not to become substituted.
Bargaining power of customers is mainly impacted by three other forces. These are a significant growth of global vehicle demand (from 77.7 million in 2010 to 107 million in 2020), important fluctuations in demand levels in different countries, and the emergence of marketing strategies aimed at the lifetime customer relationships (Potter 2017). Moreover, in accordance with forecasts, the further increase in customers buying capacity can be expected (Potter 2017). For this reason, the intensity of this force is high. It should be considered when creating a particular product and offering it to customers globally to ensure high and stable revenues.
The fourth force is the bargaining power of suppliers. First, it is impacted by the prevalent nature of relations between manufacturers, suppliers, and governments (Potter 2017). Second, the debatable character of the cost of labour also shapes the given force (Potter 2017). Finally, the increase of the global industry employment also impacts the bargaining power of suppliers as it provides new opportunities for manufacturing specific components (Potter 2017). The given force has a medium level of intensity. It means that the current situation in the sphere is beneficial for further growth as there are numerous positive tendencies towards the future evolution of suppliers.
Finally, industry rivalry remains high. The power of the given force is underpinned by three specific aspects. There are seven giant corporations which now dominate the global market and precondition its evolution (Potter 2017). Moreover, they significantly reduce the opportunity for a new entry (Potter 2017). Finally, the automobile industry remains highly attractive to governments and other agencies, which means a stable level of interest to it (Potter 2017). Regarding these factors, the intensity of the force is high. It should be taken into account by all actors to create a competitive advantage to survive and guarantee further evolution.
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