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Honda make more profit than others, making

Honda Rivalry Among Competitors: Strong ForceCompetition in the automobile industries is very high, as there are many firms in this industry that caters to many varieties of customers, so each firm try to do its best to make more profit than others, making its product more appealing and sellable in the market.Threats of Substitutes: Weak Forcethere is no huge threat of substitute in the automobile industry regarding utility, independence and efficient, even if there is a large variety of transportation, such as bicycles, subways, buses, trains and airplanes. Those could make our life easier, but that can be less convenient than automobiles. The price of fuel affects the consumer’s decision to purchase vehicles, along with the maintenance and the insurance of the car, but automobile will still be important in our personal and daily life.Barriers to Entry: Moderate Forceit is not easy for an entrant to enter into the automobile industry easily, because of the loyalty that the consumer have for the brand. It is important for recognised companies to have barriers to entry to protect themselves, as there are some companies are entering into foreign markets by buying an existing company or merging with it and making a large profit. Buyers Bargaining Power: Strong Forceconsumers have many choice to choose from with the large amount of brands out there, but the factors that affects the consumer to buy a certain brand from another are: appearance, quality, price, design. Consumers always want something new and nice looking with the latest technologies. The car have to be efficient, fuel-saving, and smooth.Suppliers Bargaining Power: Weak Force there are many suppliers in the automobile industry, and there will be multiple suppliers fighting to be the one that the manufacturer buys their parts in bulk from. If the manufacturer chooses to switch suppliers, it will deal a devastating blow to the suppliers. Thus the manufacturers can switch suppliers freely, the suppliers holds little power.Toyota Competitive Rivalry: Strong ForceCompetition in the automobile industries is very high, as there are many firms in this industry that caters to many varieties of customers, so each firm try to do its best to make more profit than others, making its product more appealing and sellable in the market.Buyers Bargaining Power: Strong ForceThe low switching costs mean that customers can easily change from Toyota to competing firms at no extra cost. This change typically happens when customers buy a new car. In addition, Toyota’s customers can easily choose their best option because they have access to accurate information, such as product information from companies’ websites. Substitutes are available, although cars from firms like Toyota are still better in terms of convenience. In this part of Toyota’s Five Forces analysis, the combined effect of these external factors is the strong force or bargaining power of customers. Toyota needs to ensure that its products match the preferences and expectations of its target customers.Suppliers Bargaining Power: Weak ForceThe limited population of suppliers around the world creates a moderate force that influences Toyota. Theoretically, this bargaining power is higher when the suppliers are fewer. However, the high availability of supply used for manufacturing Toyota’s products weakens suppliers’ power. In addition, majority of suppliers in the global automotive industry do not have forward integration or ownership and control of the distribution of materials that reach firms like Toyota. Thus, this part of Toyota’s Five Forces analysis highlights the company’s relative ease in addressing the weak force or bargaining power of suppliers.Threat of Substitution: Moderate ForceIn most cases, it is relatively easy for customers to shift from Toyota to substitutes. These substitutes to Toyota products include public transportation, bicycles and other modes of transportation. However, these substitutes are only moderately available. In some areas, substitutes to Toyota’s products are absent, such as in some suburban areas where public transportation is not readily available. In addition, these substitutes are usually less convenient than using the products of firms like Toyota. In this part of Toyota’s Five Forces analysis, the combination of such external factors in the automobile industry creates the moderate threat of substitution that Toyota must address by making its products more accessible, affordable and convenient.Threat of New Entry (Weak Force)Toyota faces the weak threat of new entry. The high costs of establishing, maintaining and growing a new firm in the industry are significant entry barriers. These barriers weaken the effects of new entrants on companies like Toyota. This force is less significant than competition and the bargaining power of customers on Toyota’s business. Thus, this part of the Five Forces analysis shows that the threat of new entrants is among the least of Toyota’s concerns in growing its business and maintaining its positions as one of the top automobile manufacturers in the world.Nissan Industry rivalry:means the intensity of competition among the existing competitors in the market. Intensity of rivalry depends on the number of competitors and their capabilities. Each company is struggling to maintain their power through competitions. Industry rivalry for Nissan is high where customers have plenty of choices of cars in the market such as luxury cars, sports cars and many more. There are number of equal or small competitors for Nissan such as Honda, Toyota and many more. The customer’s switching costs are also low where the industry is growing. In the automobile industry, the exit barriers are high so rivals stay and compete. These situations are the reasons for price wars, advertising wars and product differentiation.Threat of new entry: relies on the entry and exit barriers. It is in a company’s interest to create barriers to prevent its competitors to enter to market. They are either new companies, or companies which wish to diversify. The arrival of new entrants also depends on the size of the market. Nissan is having a low threat of new entry where automobile industry has high entry barriers and low exit barriers. For any Nissan competitor, there are significant barriers to entry such as high capital requirements to start the business, difficulties in finding and sourcing suppliers to build various components, high customer switching cost and various differentiated products.Threat of substitution: means how easily the customers can switch to the competitors product. The substitute products can be considered as an alternative compared to supply on the market. So substitutes are a threat to your company. The threat of substitute products of Nissan is moderate. Nissan certainly works to build brand and there are Nissan loyalists, but there are many substitutes in the market for customers like Toyota, Honda, Hyundai and more as well as other modes of transportation. Customers of Nissan can easily find the product or services at the same or less price but with different technologies, branding and qualities. Different technologies, branding and quality of Nissan’s products keep the threat of substitute to be moderate.Bargaining Power of supplier:means how strong is the position of a seller and how much the supplier has control over increasing the price of supplies. Nissan has limited bargaining power of supplier. Like all car companies, Nissan has some switching costs and transaction costs to switch suppliers, so the suppliers probably have some negotiating power, but it’s probably limited where Nissan has very small number of suppliers around the world. For example, Nissan is an important customer to SynQuest where contract with SynQuest has made to plan solutions with Penske Logistics providing the logistics design services and IBM, hardware infrastructure which offer integrated software and services for optimizing logistics chain.Bargaining Power of Buyers means how much control the buyers have to drive down the products price. Nissan’s customers have low buyer power. This is because the shopping cost for the product is high and. Besides, buyers are pretty fragmented around the world, and new cars can only be sold through authorized dealers, so buyers have relatively little power. Buyer’s bargaining power is low when offer differentiated product. Nissan will not face a big crisis because the buyer power is low. Porter’s 5-forces analysis defines the external environment and forces of Nissan. This will help Nissan in controlling their power and the external power to gain more profits and to stabilize their position in the market place.


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