Porter's Five Forces Strategy Analysis as it applies to the Auto Essay

Porter's Five Forces Strategy Analysis as it applies to the Auto Industry - Essay Example For international organizations, decisions have to be made on whether the strategies would be the same for every country it competes with as well as giving managers the mandate to choose their own strategies. Functional strategies for particular operations derived from business level strategies include marketing, accounting and finance. An automotive industry manufactures, designs, develops, markets and sell motor vehicles and is considered the world’s most significant economic sector in terms of revenue generation. The American automobile industry is the only industry that has never changed for years since its inception. Businesses begin, grow, develop, and end just like human beings. Some do not complete their life cycle as a result of their interruptions. They undergo a myriad of challenges that make them eventually die. Contrary to a human being, a business can change its methods of operation to more efficient mechanisms for improvement. From this view, the American automo bile industry has raised the question of whether it will be able to adapt or it will end from its stagnating condition. Before establishing an organization’s business-level strategy, it must discern the determining factors of profit maximization of an industry. The tool of analyzing these factors is what is known as Porter’s Five Forces Model. ... Introduction to the Auto Industry As defined earlier, an automotive industry manufactures, markets, designs, develops and sells motor vehicles. It does not include industries attached to automobiles after delivery to the client such as fuel stations, electronics and repair shops. An automobile industry involves producing and selling individual powered vehicles such as trucks, passenger cars, farm equipment and other commercial vehicles. The auto industry has facilitated the growth of infrastructure for long distance commuters, entertainment and shopping, growth of market centers, increased urbanization and industrialization (Burgess, 1980). The industry is also one of the key employers thus contributing to economic growth. Until 2005, the US dominated the world in production of automobile. Majority of the auto dealers in the US were blacksmith and carriage shops. Progress was soon developed when the car replaced the horse and buggy. Blacksmith shops were everywhere in the market cent ers and played the role of serving customers at a great deal. The inventors of automobile industries were engineers like Henry Leland and Henry Ford. Blacksmith shops were service oriented whereas carriage shops required time to time management together with the horses that drew them. Since their goal was to provide exceptional satisfaction to the customers needs, they slowly became auto dealers of servicing their customer’s vehicles. They were able to compete with service stations such as Jiffy Lube, Midas, and Meineke among others. From that time the number of dealers began to increase giving rise to many franchised automobile dealers. This trend went down from 1950 until 2007 (Tuman 19). 3.1 Industry definition The first fifty years saw the industry