Ford and the world automobile

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CASE STUDY 2: “Ford and the world automobile industry”

1) Briefly describe the sector in which the company operates. How is the structure of the world automobile industry likely to change overthe next five years?

The car manufacturing industry is nowadays threatened by the entrance of new competitors from emerging market countries like India or Shanghai that are expanding through theworld.

In this sector it is important the product differentiation because cars offer the same use and need to differentiate on the size, design, etc… This is why there is a high competition.Manufacturers compete with prices, innovation and car development, technology and advertisement campaigns. The cost of car development has caused many mergers and acquisitions.

Suppliers aregaining power and are very powerful in this sector because many car manufacturers are no longer doing vertical integration so they outsource materials.

The threat of substitutes is not very high. Butsubstitutes for travelling in the city would be motorcycles and for travelling further distances would be train, bus or airplane. In the case of further distances it is more likely to travel onairplanes or train nowadays; but in the case for travelling in the city the motorcycle is not a big threat for car manufacturers.

Customer’s bargaining power is high in this sector because there ishigh competition so customers are price sensitive and look for information about the characteristics and overall quality. The brand recognition is very important because most customers are loyal to acar company and it is hard for them to buy a car of another brand.

The structure of the world automobile industry is likely to become a consolidation of the 6 full line car companies that exist.Also environmental factors and fuel prices are going to be complicated and might become a big problem.

2) Analyze the role of suppliers and its impact on the competitiveness of the sector...
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