If you were the Chief Strategic Officer for an Auto Manufacturer, what major forces of competition would you be concerned about to affect your profit potential and why?
There are mainly 5 types of competition forces and factors that are needed to be analyzed. The auto manufacturer industry consists of organizations such as Toyota, Honda and so on which are involved in the production of automobiles and different other related producers such as the manufacturers of motorbikes. Thus we can analyze the major competition forces with the help of five porter's forces that will include the substitute products, rival organizations, threat of new entries, bargaining power of the customers and bargaining power of the suppliers. When we look at the threat of new entrants in the automobile sector, it means that the likelihood of any new producer to enter in the production of automobile and it will have the negative impact on the potential profits of the company as it will attract some of the existing customers and thus will cause the profit and sales to fall down.
When we deal with the bargaining power of the customers, if it is low then it will also impact the profit margin level. The other factor that has to be considereded is the bargaining power of the suppliers. If the suppliers provide the raw material at the lower cost, this will result in greater profitability of the company due to the lower cost of production. The competition in the industry can also hamper the profit generation as if there is greaer competition then it will result in the price war and thus reducing the profit potential
If you were the Chief Strategic Officer for an Auto Manufacturer, what major forces of competition...
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