Analyze a Global Trend and Explain the Driving Forces and/or Contributing Factors Affecting the Competition Within a Specific Industry.

Topics: Automotive industry, Renault, Volkswagen Group Pages: 5 (1503 words) Published: June 18, 2012
Analyze a global trend and explain the driving forces and/or contributing factors affecting the competition within a specific industry.

The world population will increase another 3 billion to 9 billion in 2044 (Figure 1), with the imbalance growing between population numbers and vital life sustaining resources, humans must actively conserve cropland, freshwater, energy, and biological resources. Humans need to develop renewable energy resources to reduce the damages of earth resources and diminishes of human being.

The World Health Organization says that about 2 million people die prematurely every year due to air pollution globally. There were estimated that over 600,000,000 passenger cars in the world today (, and the major pollution come from the air pollution which released out from the vehicles. “In urban areas, harmful automotive emissions are responsible for anywhere between 50 and 90 percent of air pollution.” (Meghan E. Smith)

This brings to a concern to all automotive industry to change their business concept and designing green car. The trend in automotive markets target on the environmentally-friendly vehicles. All consumers are eager to get the latest green car to flaunt their green behavior and possessions because there are now millions of other consumers who are actually impressed by green lifestyles. More and more people around the world are turning to the possibilities offered by the developments towards more environmentally-friendly vehicles. Car manufacturers are investing a lot on research and development in order to build the best environmentally-friendly vehicles which will attract the consumer attentions. It means building environmentally-conscious vehicles that do not sacrifice both aesthetics and costs in order to reduce fuel emissions.

Now the trend in automotive market, all Generation Y consumers are looking at electric cars, hybrids and clean diesels car. They willing to embrace new brands and new technology which can be environmental friendly yet it does not compromise to the size and performance of the car. Generation Y will define the automotive market. Therefore, car manufacturers need to design and build car which suit to the market demand. Porter's Five Forces

The Porter’s Five Forces analysis is designed to evaluate the competitive forces in the industry the firm operates. It helps in analysis the competitors and the threats in the market. The Porter analysis examines three horizontal forces, or competition in the same industry: Threat of new entrants, threat of substitute products and threat of established rivals. Two forces are from vertical competition, or those from the supply-chain: Bargaining power of customers and bargaining power of suppliers. The threat of the entry of new competitors - The entry of new competitors will bring down the price of the car, as the consumer has more choices. Unfortunately, the barrier for new competitors will be the economic of scale. Furthermore, large capital investment needed to set up a manufacture plant or on research and development. Different brands of car manufacturer are trying focus on the green car as their focus products, which make the market more competitive. China is looking into designing green car, they are researching on how to reduce CO2 emission out from the dirty coal. (Eric Loveday) As China is part of the biggest population and manufacturer country, it will be a big threat to all existent car manufacturers as China gain the Economic of Scale. Even with the large economic of scale, the new firms must sustain themselves in the competitive market around the world. The threat of substitute products or services - Substitute of car could be public transport (e.g. bus and train). Nowadays, all rails are generated by electric unlike burning of woods to generate the motor during the old days. The automotive markets are very competitive as different brands of car manufacturer are designing the...
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