Strategy: Automotive Industry and Bargaining Power

Topics: Automotive industry, Ford Motor Company, Strategic management Pages: 13 (3351 words) Published: November 3, 2013

Strategic Management

Student NO.:
Words: 3,011

Main analysis3
1. How Porter Five Forces Model Reflect Upon the Reality3
1.1 Porter Five Forces Model3
1.2 Substitute4
1.3 Threat of New Entrants5
1.4 Rivalry5
1.5 Bargaining Power of Suppliers5
1.6 Bargaining Power of Buyers5
2. Compare Theory and Practice6
2.1 Rivalry for Ford6
2.2 Threat of New Entrants7
2.3 Bargaining Power of Ford10
3. Strategy of Overall Cost Leadership 11
4. A Plan for Ford12
4.1 SWOT Analysis of Ford12
4.2 How measurement Ford can implement13
4.3 The Risk Management of Ford14

In this part, it simply illustrates the contrast between the Porter Five Forces Model and the practice of car industry in China. For instance, the Ford Motor Company in China are intended to increase its investment and cooperation sparing no effects to endeavor for another 10% share in the car industry, production abiilty reached 400,000 which is a huge shift from the original forty thousand, reaching most vehicles production local technology. Such actions mean Ford Motor Company is struggling to drive up the bargaining power of suppliers which is one of the most influential factors in Porter Five Forces Model. In the next part, it can be more explicit and more detailed through five forces to analysis how could Ford Motor do to win the share market and make the profit when enormous competitors flood into China market.

In more modern and developed areas in China, such as Beijing, Guangzhou and other cities, buyers basically have buying standardized products that branch from multiple suppliers is also completely available economy. If this is the case, the bargaining power of buyers tend to be increased, it also can cut the profit to car manufactures. In addition, with the rival competition in car field and a variety of dilemmas, this report will put forward to some suggestions to Ford Motor Company as a recovery plan to conflict it.

What is more, the risk management is the material effect in strategy management admittedly. Risk management is the identification, assessment and priority (either positive or negative), through the application of the risk of coordination and economic resources to the lowest, monitoring and controlling the predictable event which most might happen, in order to optimize opportunities (Douglas W. Hubbard, 2009). In the next part, it will focus on the reason why company must make risk management and how to institute it, even how to develop a series of measures for risk management.
Main analysis
1. How Porter Five Forces Model Reflect Upon the Reality
1.1 Porter Five Forces Model
Porter five forces analysis is a technique for competitors to make analyzing of industry, as well as a tool of evaluating strategy of business development. Michael E. Porter argued in 2008 that Industrial Organization (IO) have drawn Porter Five Forces to determine and identify the competitive intension within identical market and therefore to be an attractive market.

Porter's five forces competitive, three of them touch upon rivalry from external environment--the threat of substitute products or services, the threat of existed rivals, and the threat of new entrants (Porter, M.E, 2008); the rest of them are internal threatened--the bargaining power of suppliers and the bargaining power of customers (Porter, M.E, 2008). Source:

1.2 Substitute
Two companies in the same industry or business in different industries, may manufacture the same type or function products becomes substitutes to each other, which have a mutual-competitive behavior between them, such alternatives competition may take sharp in various forms from the existing enterprises competitive strategy in the industry (Porter, M.E, 1980). First, the prices of existing product, along with the increasing potential profit, is to be...
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