Porters Five Forces - Essay Example

Ford Motors Corporation A. Identify the relevant industry segment for Ford Motor Company. Why did you select this segment? (2-3 sentences).The main industry segment for the Ford Company is the manufacture and distribution of auto mobiles. I selected this segment because it is the number one source of revenue for the company. (United States Autos Report 2014)B. Based on Porter’s 5-forces diagram, prepare a brief summary(1-2 paragraphs for each force) of the conditions that affect Ford and it’s industry.

Answer at a minimum the following questions:1) Who are the primary suppliers (identify at least 2 specific suppliers), describe each supplier’s overall operation and identify what is supplies; for each supplier group are there many or few; who has power over whom?2) The main suppliers are TRW Automotive Holdings Corporation and Johnson Controls. TRW Automotive supplies the company with braking systems, integrated vehicle control systems, engine components, electronics, airbags and seatbelts and suspensions systems.

Johnson Controls supplies the Ford franchise with car batteries, electronics, seats and interiors. TRW is ranked higher than other peers in the industry including Johnson Control and it is due to this reason that TRW Automotive received two Ford World Excellence Awards. (United States Security Exchange, 2014)3) Who are the major buyer groups of the product provided by the industry; what are their characteristics ( i.e. size of group, demographics, income level, etc.); are there many or few in each buyer group; who has power over whom?4) The golden generation (55 to 64 year olds) had higher vehicle purchases than other age groups according to a recent survey by Michigan University.

In 2011 alone, Ford Motors sold 23% of all its models to this age group, which was higher than all other industry players combined. This age group is estimated to be around 76 million and has passed 35 to 44 year old age group as the consumer leaders. (United States Security Exchange, 2014)5) Who are the major competitors in the identified industry; what is the market share profile, does Ford have power in the industry; why or why not? According to 2014 survey, the three main industry players are General Motors Company, Ford Motor and Toyota Motor.

The total number of units sold by General Motors was 2.7 million; this represents 17.9% of the total market share. Ford Motors came second with 2.4 million units sold; representing 15.9% market share. Toyota came third with 2.2 million units sold in the US, representing 14.3% of the market share. (Business Monitor International, 2014)6) What are the potential substitutes for Ford’s industry; what is the potential of this industry’s customers switching to substitutes?Ford’s F-Series remains to be the best selling model in the US.

However, there are domestic and international brands that are growing in popularity each year. Chrysler’s Jeep Cherokee reported 9% increase in sales, 1% shy of the F-series. Subaru has also seen its sales rise after it switched focus from china to the US. Other popular brands include Mercedes Benz and BMW. (Business Monitor International, 2014)7) How easy is it for others to enter the industry that Ford is in? Does Ford have power over the threat of new entrants; why or why not?Entrance into the motor industry is not easy, the main reason being cost leadership.

The main market players like Ford Motors enjoy low costs of production that see them enjoy higher profits. New industry players may not enjoy these benefits. Furthermore, companies like Ford Motors have consumer trust due to many years they have been in operation. New entrants may be faced with the problem of consumer doubt.References1. Business Monitor International (2014). UNITED STATES AUTOS REPORT. Retrieved from www.businessmonitor.com. 2. United States Security Exchange (2014). Ford Monitor.