The paper "Toyota Industry Environment Analysis" is a great example of a marketing case study. This section covers the analysis of the automotive industry from a global perspective. The parts covered include the characteristics of the automotive industry, external analysis of porter’ s five forces and attractiveness of the automotive industry. Characteristics of the Automotive Industry The automotive industry is multifaceted. It entails complex product development and manufacturing procedures. The automotive supply chain entails different levels of suppliers as described below (Humphrey & Memedovic, 2003). Suppliers can be generally be classified into three tiers; First-tier suppliers: They put together complete systems such as brakes or interior seats for direct delivery to Original Equipment Manufacturers (OEMs).
They offer a high level of research and development as well as product development as part of the integrated services they tender. Second-tier suppliers: They supply modules and constituent parts or support services to the first-tier suppliers for incorporation into the systems supplied to vehicle manufacturers. Third-tier suppliers: They supply raw materials for the supply chain or more generic engineering parts and services such as metal castings, mechanical tools, rubber and plastics. Figure 1: Types of Companies in the Automotive Industry Source: Auto industry Market growth in the automotive industry is sluggish in reputable markets such as the U. S.
and Western Europe. However, with the emergence of globalisation, vehicle manufacturers have real and potential growth in emerging economies such as China and India that offer cheap labour. In fact, today companies are moving manufacturing operations to these countries from where they then export to other markets as they try to scale down production costs. Other potential markets include Brazil, South Africa and Russia that are whose economies are posting strong growth (Humphrey & Memedovic, 2003). The automotive industry is also characterised by a very strong firm structure where a few big companies exert control over smaller companies.
The biggest automotive companies are based in only three countries, Japan, the United States of America and Germany. These companies control products in the main markets. Moreover, in the automotive industry, final vehicle assembly, as well as the production of parts, is for the most part been kept close to end markets due to political factors. Market infiltration, high levels of motorisation plus the trend for vehicle manufacturers to ‘ build where they sell’ have supported the scattering of final assembly, which today takes place in many more countries.
For example, Toyota has set up manufacturing operations in more than 210 countries at present. In light of this, the companies have set up strong regional structures (Humphrey & Memedovic, 2003). External Analysis-Porter’ s 5 forces Michael Porter (1980), in his book ‘ Competitive Strategy: Techniques for Analyzing Industries and Competitors’ , analysed the market forces that directly influence organisations’ profitability and repute, hence organisations have to respond to them.
He was able to identify five forces. The forces form an awful model that is nowadays used in strategic management and planning to evaluate a company's competitive position. The model is based on the thinking that a corporate strategy should congregate the opportunities and threats in the organisation’ s external environment. In particular, the competitive strategy should be based on an understanding of industry structures and the way they change. Michael Porter’ s model can as well be used to analyse industry. In fact, the model is a more common business strategy tool today and is widely employed in business strategy formulation.
The model has demonstrated its efficacy in various situations measured up against other strategic management models. A change in at least one of the five forces, in general, requires a business to have another look at the market owing to the change introduced in the industry (Porter, 2008).
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