Wednesday, March 26, 2008

Porter's Five Forces - Automobile Industry

Five Forces Analysis was developed by Michael Porter to better identify competitive opportunities and attractiveness within an industry or market. Other than a SWOT analysis, this is another analysis tool to identify opportunities and risks before entering an industry. Porter’s model supports analysis of driving forces in an industry. The management can make better decision by using the information that evaluated from detailed Five Forces Analysis.

The five forces that Michael Porter has identified are widely used to assess the structure of any industry. They are:

  • Threat of New Entrants
  • Bargaining Power of Suppliers
  • Bargaining Power of Customers
  • Threat of Substitutes
  • Competitive Rivalry between Existing Players

Automobile is one of the most convenient transportation tools in our modern society today. Globalization enables foreign auto dealers to enter American market easily and also creates competition. In America, there are three major automobile manufacturers. They are General Motors, Ford, and Daimler Chrysler. However, the biggest competitions are the foreign auto manufacturers, Toyota and Honda.

Threat of New Entrants: MEDIUM

It is not that easy for an entrant to enter into a car industry because of the brand loyalty of customers. However, some of the well known foreign companies entered into US car industry easily, for instance, when Honda Motor, Co. opened its first office in Ohio, the major competitions began. The expansion of the foreign entrants decreases the market of American companies.

Bargaining Power of Suppliers: LOW

Suppliers have a little power in an automobile industry. That’s because numerous suppliers rely on some particular auto manufacturers to buy their products. Each manufacturer has many suppliers. For example, Toyota has more than 10 different suppliers in US. The main qualifications of the suppliers are the quality, cost, and delivery of the products. If suppliers can’t meet those basic considerations, it is hard for them to survive.

Bargaining Power of Customers: HIGH

There are various brands and models of the cars to choose from nowadays. The factors that affect consumer to make a buying decision are: the appearance, quality, price, and environmental effect. People always want a new and nice looking car. For those rich people who love cars, they always purchase the new released and attractive model. Besides that, the quality of the car is an important issue. The car has to efficient, which means saving gas, protecting our safety, and running fast. In addition, since there are many competitors, consumer have more choices to select a cheaper, but good quality car. Moreover, because of the global warming and other environmental effects, a lot of the manufacturers make their cars unique in order to protect the environment. Based on a variety of the lifestyles, people choose to purchase a car in a different way.

Threats of Substitutes: LOW

It is true that there are many of transportations substituting automobiles. They are bicycles, subways, buses, and trains. These substitutions really make our life easier if we live in the cities. On the other hand, for those people who live in Utah, upstate NY or suburb area, car is the only transportation tool other than walking.

Competitive Rivalry between Existing Players: LOW

Competition between existing automobile companies is high because there are too many choices for the customers. That may cause the industry earning lower profits when the cost of the competition is high.


Top 20 motor vehicle manufacturing companies by volume 2006
Total motor vehicle production (1000 units)
Group10002000300040005000600070008000900010000
Toyota*



9120
General Motors

8926
Ford


6268
Volkswagen Group

5685
Honda

3670
PSA

3357
Nissan


3223
Chrysler

2545
Renault

2492
Hyundai


2463
Fiat


2318
Suzuki

2297
Daimler



2045
Mazda

1396
Kia

1382
BMW
1366
Mitsubishi Motors

1313
AvtoVAZ
765
Subaru

587
Tata Motors


561
KeyCarsLight Commercial VehiclesHeavy Commercial VehiclesHeavy Buses
Total global production: 68340
Reference: World motor vehicle production by manufacturer: World ranking 2006. OICA (July 2007).
*Toyota total includes Daihatsu production figures, which OICA list separately. Daihatsu is a Toyota Motor Corporation subsidiary.

Monday, March 10, 2008

Mission Statement

"Eisenhower Medical Center, a not-for-profit organization, exists to serve the changing health care needs of our region by providing excellence in patient care with supportive education and research."
Every organization has its mission, primary purpose, a reason for being. There are three main elements of a mission statement. They are: the purpose, the business, and the values. In my opinion, Eisenhower Medical Center has a very comprehensive and succinct mission statement. It does not only identify three major elements, but also describe the name and the type of the organization. As we can see, the purpose of this not-for-profit organization is to seve the changing health care needs. The business is providing excellence in patient care in their region. And last, the based on the needs of the patients, Eisenhower Medical Center support them with more educations and reseraches. (The values)
Eisenhower Medical Center has more than 35 years of history. It originally opened in 1917. Over the past years, it is recognized for its Center of Excellence in Oncology, Cardiovascular, and Orthopedics. As of June 2006, there were over 11,858 surgical procedures done. In the future, I believe Eisenhower Medical Center will keep committing in this mission and help more people who's in need.