Automobile Industry Is A Highly Diversifies Marketing Essay

Automobile Industry Is A Highly Diversifies Marketing Essay Industry background Automobile industry is a highly diversifies sector which represent industries linked with the production, retailing, wholesaling and maintenance of automobile vehicles (Anavrekov, 2004). The first automobile was introduced in 1885 by Karl Benz. Since that time automotive industry has came through a lot of changes and developments. Figure1 shows brief history of automotive industry. The industry main focus for many years was concentrated on baby boomers generation. Currently industry switched to generation X, which is baby boomers children and to the generation Y, age which allows buying cars ((Dicken, 2007). Source: A Brief History of the First 100 Years of the Automobile Industry http://www.theautochannel.com/mania/industry.orig/history/chap16.html Strategic Posture of Key players According to Black (2009) every country’s automobile industry is dominated by four leading corporations namely General Motors (GM), Toyota, Ford Motor Company (Ford), Volkswagen , and Daimler Chrysler (Figure2). Source: Toyota Motor Corporation Company profile http://www.toyota-industries.com/corporateinfo/corpdata/ ; Daimler corporate web site http://media.daimler.com/dcmedia/0-921-614814-1-871937-1-0-0-0-0-0-11701-614318-0-1-0-0-0-0-0.html; Ford Motor Company http://www.ford.com/about-ford/company-information; General Motors http://www.gm.com/corporate/about/ Size of the Industry and Segmentation The automotive industry takes around 9.5% of world merchandise trade and 12.5% of world export of manufacturers (Hatani, 2009). However, the world production of vehicles was influenced by economic downturn in 2009 (Figure3) The leading countries that conduct foreign trade are (data from Business Monitor International Statistics, 2010): United States (37.2% of Market Share) Canada (28.67%) Japan (26.4%) Germany (14.81%) Mexico (10.21%) Korea (5.48%) Figure 3 Automotive Production 2007- 2009 Source: The global automotive market in 2009 http://www.platinum.matthey.c om/uploaded_files/Int_2009/the_global_automotive_market_in_2009.pdf Figure4 shows segmentation of the industry. Source: Automotive components and parts http://www.automotive-online.com/auto-industry.html Figure5 illustrates current trends of the industry. Source: Greenber, Karl. (2009) Automakers steering drivers into evolution. The New York Times. Catalan, J. (2010).  Strategic policy revisited. Business history. Porter’s Five Forces Figure 6 illustrates the framework of Porter’s forces. The potential profit of the industry will be influenced by the strength of all five forces together with required investments, prices and costs. Figure 6 Framework of Porter’s Five Forces Source: Industry Handbook: Porter’s 5 Forces Analysis https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgU-34XgJCEuElsqRBjc7l5HmW_wM5xoafcv1uIFR_fdkmu-2UwT0xumOLRJG41_88pfD-RaESHj5cIMcr5amaewkJ9L8k5WWSt6-OxDN8Bc_77vy3nlbAhQzCzJHuBeuHEpn-USctbFfs/s400/IndustryHandbook1x.gif Threats of new Entrants The automotive industry is very mature; in order for new entrant to compete they should achieve economies of scale and invest in technology and brand name in order to reach the same level (Paterson, 2007). Also threat comes from mergers and acquisitions, for example the merger of Daimler and Chrysler or Daimler and Mitsubishi. Further barriers explained in Figure7. Source: Porter, M.E. (2008)  Ã¢â‚¬ËœThe Five Competitive Forces That Shape Strategy’,  Harvard business Review, January 2008. Bargaining Power of Suppliers There is huge number of suppliers in the industry; therefore the power of suppliers is very low. Manufacturers can switch easily from one supplier to another (Special Report, 2005). However, big corporations like Mercedes prefer not to switch, but to keep good relations with their suppliers in order to keep scale of operations and the total expenses on suppliers (Taylor, 2003). Currently, a lot of manufacturers use just-in-time inventory system and this pushes suppliers create their factories near automobile producers, which prove the low power of suppliers (Pa vlinek & Janak, 2007).