This for the industry to develop. The Automotive Product

        This
report about the analysis of automobile industry. For invest in this industry,
it is far better to take over a company that has nice customer loyalty and
certain scale. This report explains the reasons for the investment in the
industry and provide some advices.

Dominant
Economic Characteristics of the Industry

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

         The
automobile industry is a huge market, and it is global. With the increase of
people’s income, almost every family will have cars or even more cars. Despite
the fierce competition in the car industry, companies with high customer
loyalty are still making a lot of profit.

         The new
car sales have been rising in recent years in US, the annual growth is 4.5%
over the past five years and the revenue is $905bn. Besides, global car sales
have been rising in recent decades, declining in recent years but still
growing. IHS Markit estimates that 94.5 million light vehicles were sold in
2017, up 2.4% from 2016. In the coming years, the global auto
market is expected to continue to grow steadily as the demand for auto in
emerging market countries continues to grow. From 2018 to 2022, the annual
growth rate of global auto sales was about 3.2%. Global car sales are expected
to increase to 113.59 million vehicles in 2022. This is no doubt that this
industry has great potential. Besides, electric vehicle also has great
potential. It’s the opportunity for the industry to develop.

 

           The Automotive
Product Life Cycle is long, including introduction, growth, maturity, decline. Automobile
products have different market characteristics in different life cycle stages,
and need to formulate corresponding marketing goals and marketing strategies.
If we take over a company, we can use marketing strategy in the period of introduction
to attract customers. And then, according to Growth marketing strategy, we
should improve the quality of automobile products and services, increase the
new functions and features of automobiles, choose the right time to
reduce the selling price, attract price sensitive customers, and restrain
competition. It’s necessary to keep customers. Next, we need to obey Mature
marketing strategy and Recession marketing strategy, it will benefit to consolidate
the reputation of the enterprise and increase customer loyalty.

            There
are 10 major automobile groups in the world today, like GM, Toyota, Ford, Volkswagen,
Honda, Fiat and so on. There are about 100 brands under their flag. If we plus
other unknown automobile companies, this is no doubt that the competition in
this industry is very fierce.

       Auto
manufactures in the United States made an average net profit rate of 3.3% in
2016. Global automobile manufactures made an average profit rate of 3.9% in
2016. Compare the two data, average profitability of the industry in America is
lower than the global average profit rate. In the next decade, the Internet
connected automotive technology and autonomous vehicles will set off another
revolution in the automotive industry. In 2016, about 40% of the American
respondents said they were willing to use fully autonomous vehicles, probably
because they thought the vehicle was safer than the traditional car. The global
market for autonomous driving hardware is expected to increase from $400
million in 2015 to $40 billion in 2030. It shows that the industry has a great
potential for development.

        From
these statistics we can learn there is long term profitability and growth
potential. Because this industry is a huge market, more and more people will
need to get to the car, meanwhile some car purchase incentives will stimulate
consumer spending.

Analysis
of general environment

         In more
than 100 years of development, the world automobile industry has experienced 3
great changes. The first change was the Ford automobile company launched Model
T, the invention of the automobile assembly line, so that the focus of the
world automobile industry from Europe to the United States. The second
revolution in Europe through the variety of production methods, breaking the long-term
monopoly of the American Motor Corp in the world of motor racing, the center of
the world automobile industry from the United States back to Europe. The third
revolution in Japan through the perfect production management system, the
formation of lean production, the full development of economy cars of high
quality and inexpensive became the United States, Japan and Europe after the
third world automobile industry development center. These driving forces
promoted the progress of auto industry and created more opportunities for this
industry.

Analysis
of competitive environment:

Five
forces analysis

       Threat of
new entrants is weak. It is difficult for new brands to enter the auto
industry, requiring considerable investment to build manufacturing facilities,
distribution networks and employ skilled staff. Another major obstacle is the
competitive level of existing brands. Unless a new brand brings innovative and
differentiated products to the market, the opportunity to gain market share is
very low. Although the law does not mean the obstacles to new entrants, brand
image and reputation may be a major challenge before new players. The brand
image is the main competitive advantage of the existing brand. Any new brand
must concentrate on the quality of the project and the product. Besides, it is
easy to obtain raw materials, but it is difficult to achieve economies of
scale. In addition, it is not an easy thing to open up a new market. Some
governments have used high import taxes to prevent foreign brands.

       Bargaining
power of suppliers is weak. Most of suppliers are small players, so their
bargaining power are weak in this industry. Besides, Brands can easy to decide
weather they want to change suppliers. Therefore, the bargaining power of
suppliers is very low.

      
Bargaining power of buyers is Moderately strong. Buyers have many
choices and most buyers are sensitive to prices. If buyers are not satisfied
with the price, they can go to buy other brands. Neither big companies nor
small buyers have a threat of backward integration, but in general, their
bargaining power is relatively strong. For attracting customers, brands should
focus on building customer loyalty through design, quality and competitive
prices. This is a very practical approach.

        There
are several alternative modes of transportation, like taxis, buses, trains,
airports. However, none of them are convenient than own car. For example, if I
have a car, I can use it day and night whenever I need. However, I can’t get a
taxi or bus all the time. So that the threat of substitutes is weak.

         The
competitive rivalry in the industry is very strong. There are a lot of
companies in this industry. The competition among existing enterprises is often
manifested in price, advertising, product introduction, after-sales service and
so on. Its competitive strength is related to many factors. Besides, some brands
have high customer loyalty, large industry scale, and mature. This exacerbates
competition or market share.

         On
balance, there are opportunities. Although competitive rivalry in the industry
is very strong, if boss can invest in companies that have nice customer loyalty
and industry scale, and then gradually increasing these advantages, it’s still
an opportunity.

The
critical success factors of automobile industry

        The critical success
factors including market position, operating management, product range and
development, financial policy, capital structure, cash flow protection and
liquidity and financial flexibility. Based on the critical factors, the
critical activities on the value chain include sourcing raw materials,
processing or manufacturing process, and distribution and marketing. In my
opinion, sourcing raw materials and marketing are important. Controlling the
purchase of raw materials is beneficial to reducing costs and ensuring quality.
Besides, the ultimate goal of the product is to sell and enter the market. The
situation of sales is very significant.

         The
core competency of successful firms is grasping marketing. The progress of
marketing including opportunity identification, new product development,
customer attraction, customer retention and loyalty building and order
fulfillment. If an enterprise can do every step well, it will be more
competitive and on the way to success. However, it difficult to acquire or
build these competencies. The enterprise need large data analysis and train
employees to get these core competencies. It’s difficult to copy core
competencies. Because the same method is not necessarily suitable for every
enterprise, and enterprises need to find ways to fit their own companies
through practice and experience.

 

 The business-level strategies of the
successful firms in this industry

         One of
the successful firm is Ford Motor Company. Ford Motor Co, American automotive
corporation founded in 1903 by Henry Ford and 11 associate investors. Ford
motor company produce vehicles includes Ford, Lincoln, Mercury, Jaguar, Volvo,
Land Rover and Aston Martin. In addition, it owns the world’s largest credit
company that is Ford Credit, the world’s largest car rental company that is
Hertz, and QualityCare. The Ford Motor Co has a very competitive marketing
strategy that aims to establish long-term relationships with previous and loyal
customers and new potential customers. For example, Ford’s products associated
with various sports events to enlarge brand influence and enhance brand
freshness. It has been regarded as the sponsor of the UEFA Champions League in
the past, and many fans and customers are very recognizable to the brand.
Besides, Ford has implemented differentiation strategy. For example, it has
been studied electrification for nearly 20 years. It is America’s top-selling
plug-in hybrid brand nowadays. As the development of computer technology,
electrified car has become the main trend of development. So far, electrified
cars are relatively a new part of the car industry, with no very big
competition. There is opportunity to establish a strong competitive position
and avoid direct from the incumbent firms, but it is not easy to do that. The
best situation is that the company makes a difference in several ways, like
design or brand image (Mercedes Benz’s reputation in the car
industry), customer service, technical features and so on. 

         In
conclusion, in order to enter the automobile industry, new brands need a lot of
investment to build production facilities, distribution networks and employ
skilled workers. Therefore, it is best to enter through acquisition of an
existing firm better than creating a new company. Besides, striving to improve
customers loyalty and creating more value for customers. These are the key points
of a company’s growth. In addition, the company should implement the strategy
of low cost and differentiation, which can improve the profit, attract
consumers and enhance the competitiveness of the enterprise.

 

x

Hi!
I'm Brenda!

Would you like to get a custom essay? How about receiving a customized one?

Check it out