Porters Five Forces Analysis of Automotive Industry in Pakistan and Bangladesh

Topics: Suzuki, Automotive industry, Automobile Pages: 7 (1746 words) Published: May 1, 2011

You are working as Head Strategic Planning for a US Based Company (ALPHA Enterprises) that is engaged in (Vehicle or Electronics Item) manufacturing and selling business in US and Europe. As per Company’s Global Expansion Plan, ALPHA Enterprises desires to expand its business network (Both Manufacturing and Selling) either in Pakistan or Bangladesh. Your Department has been tasked by CEO to conduct a Strategic analysis of Business/Industry for both the countries. Keeping this in mind

Q1: Conduct a Strategic Analysis using Michael Porters Five Forces and on the basis of said analysis recommend the Country that is more feasible for investment?

Michael Porter’s competitive forces model
* Provides general view of firm, its competitors, and environment * Five competitive forces shape fate of firm
a. Traditional competitors
b. New market entrants
c. Substitute products and services
d. Customers
e. Suppliers
We will discuss those points one by one for automobile industry with respect to Pakistan and Bangladesh.

Automotive Industry in Pakistan:

The Automobile industry has been an active and growing field in Pakistan for a long time, however not as much established to figure in the prominent list of the top automotive industries. Despite significant production volumes, transfer or technology remains low. Most cars in the country have dual fuel options and run on CNG (compressed natural gas) which is more affordable than petrol in the country.

The automobile industry in Pakistan can be broadly categorized into following segments:

* Cars and Light Commercial Vehicles (LCVs).
* Two and Three Wheelers.
* Tractors.
* Trucks and Buses
* Vendor Industry

Traditional Competitors:

There are only three major passenger car assemblers in the market; Pak Suzuki, Indus Motors and Honda Atlas. Pak Suzuki has a almost complete monopoly in the small car segment as it faces almost no competition other than the single odd Diahatsu Cuore produced by Indus Motors. In the Subcompact Sedan segment Toyota Corolla, Honda Civic, Honda City, and the Nissan Sunny are currently the only cars in production. There are still no locally made SUV, Mid or Full sized sedans available.

New market entrants:

Since Pakistan's automotive sector has experienced a huge growth rate, many local and foreign auto brands have installed their assembly plants in the country. These companies includeAdam Motor Company which has the privilege of designing and manufacturing Pakistan's first home grown (mass produced) car known as Adam Revo (short for revolution), Dewan Kia Motors with their newly launched Kia Picanto, Dewan Hyundai Motors with Pakistan's all time favourite Hyundai Santro Club, Toyota Motors of Japan with their Vitz, Honda Motors of Japan with their Jazz , Nissan Motors of Japan with their Nissan Micra , BMW Motors of Germany with their 1 Series and upcoming Pak Hero Motors (a subsidiary of Pak Hero Motor Cycles) with Pak Hero Type 1.

Substitute products and services:

Pakistan has not adopted any automotive emission or safety standards. Therefore, most cars manufactured and sold in the country are still carburettor based and do not meet any international emission standards. Many locally made cars such as Suzuki Mehran, Suzuki Cultus, Suzuki Ravi, Suzuki Bolan, Diahatsu Cuore, etc are globally obsolete cars from the 1970s or 1980s which are no longer produced or sold in any country other than Pakistan. So there has been no major substitute to these vehicles and their monopoly was not affected at all. A good and comfortable public transport may be a substitute if available.


In Pakistan context there are 9 cars in 1,000 persons which is one of the lowest inthe emerging economies which itself speaks of high potential of growth in the autosector and more so in the car production. Rising per capita income with changing...
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