presentation 5force model 18grp

8/6/2019 Presentation 5force Model 18grp

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Submitted by

Inder Mankoo (097)

SwethaVijayan (100)Vikrant Gole (075)

Porters's Five Force Model


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Outline

y Porters Five forces

y Automobile Industry in India

y Five forces on Automobile Industry

y Five forces on TATA NANO

y SWOT analysis on Tata Nano


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Porter's 5 Forces

y A business has to understand the dynamics of its industries andmarkets in order to compete effectively in the marketplace.

y Porter's 5 Forces analysis deals with factors outside an industry thatinfluence the nature of competition within it.

y Porter defined the forces which drive competition, contending thatthe competitive environment is created by the interaction of five

different forces acting on a business

y Porter suggested that the intensity of competition is determined bythe relative strengths of these forces.


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Five Force Model

Industrycompetitors

(Intensity ofrivalry)

Potential Threats

(Threat of newentrants)

Buyers

(Bargaining power ofBuyers)

Substitutes

(Threat of substituteproducts or services)

Suppliers

(Bargaining power ofsuppliers)


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Five Force ModelIndustry

competitors


y A larger number of firms

y Slow market growth

y High fixed costs

y Low switching costs

y

Low levels of product differentiationy Strategic stakes are high

y High exit barriers place a high cost on abandoning the product.


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Five Force Model

Potential Threats


y

Government creates barriersy Patents and proprietary knowledge serve to restrict entry

into an industry


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Five Force ModelSubstitutes


y Competition not only arise within the similar industry but also

in different industry

y Companies in other industry offer products with similar

features and functionality or even better act as substitute for

the products.


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Five Force Model

Suppliers


y Supplier and producer relation

y Bargaining power of suppliers


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Five Force Model

y Consumers are the final users

y Bargaining power of consumers

y Rival firms offer discounts, warranty and services to switch

the consumer from one brand to another in the sameindustry.

Buyers



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Five Force Model

y

Exit barriersy Industry concentration

y Fixed costs/Value

added

y Industry growth

y Intermittent

overcapacity

y Product differences

y Switching costs

y Brand identity

y Diversity of rivals

y Corporate stakes

Industrycompetitors


y Absolute cost

advantagesy Proprietary learning

curve

y Access to inputs

y Government policy

y Economies of scale

y Capital requirements

y Brand identity

y Switching costs

y Access to distribution

y Expected retaliation

y Proprietary products

Substitutes


y Switching costs

y Buyer inclination to substitute

y Price-performance trade-off

of substitutes

Potential Threats



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Five Force Model

Suppliers


y Supplier concentrationy Importance of volume to supplier

y Differentiation of inputs

y Impact of inputs on cost ordifferentiation

y Switching costs of firms in the industry

y

Presence of substitute inputsy Threat of forward integration

y Cost relative to total purchases inindustry

Buyers


y Bargaining leveragey Buyer volume

y Buyer information

y Brand identity

y Price sensitivity

y Threat of backward

integration

y Product differentiation

y Buyer concentration vs.industry

y Substitutes available

y Buyers' incentives


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Automobile Industry In India


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y Previously, Indian automobile industry heavily depended onforeign technologies . However, over the years, the manufacturersin India have started using their own technology evolved in thenative soil.

y The automobile sector of India is the seventh largest in the world.

y In a year, the country manufactures 2.6 million cars contributing

to worlds annual production of about 73 million cars in a year.

y The country is the largest manufacturer of motorcycles

y Fifth largest producer of commercial vehicles.


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y As per Asia Economic Institute indicate that the Indian automobile

sector is set to emerge as the global leader by 2012.

y

In 2009, India rose to be the fourth largest exporter of automobilesfollowing Japan, South Korea and Thailand.


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Automobile industry in India


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Five forces of automobile industry

y Degree of rivalry

y Intense due to entry of foreign companies

y Extremely high, with any product being matched in a few months by thecompetitors.

y Threat of substitutes

y Fairly mild

y Switching cost associated with other mode of transportation is high

y Barriers to entry

y Barriers to enter automotive industry are substantial.

y Establishing companies are entering new markets through partnership,buyout and merger.

y Domestic companies has the potential to compete home market


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Five forces of automobile industry

y Suppliers power

y Buyers are less and suppliers are many, due to which suppliers power is

low

y Buyers power

y Very high

y Low switching cost associated with selecting from among competing

brands


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Tata - NANO


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y Five to ten years back, if one being asked, From where will

the next big automotive innovation originate?

y

The answer could have been Japan, Germany, Italy, US orsome other European nation, no one would have dreamt of

India. But as its said nothing is impossible, Tata's strong will

and determination to make the worlds cheapest car has been

achieved and the dream of owning a four wheeler for a

common Indian can now be fulfilled.


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SPECIFICATIONS ABOUT TATA NANO

Speed of Tata Nano:Top speed 105kmph

Dimension:Length: 3.1m

Height: 1.6 m

Width: 1.5 m

Engine specifications for

Tata Nano:Rear-wheel drive

2-cylinder, 624 cc

33 bhp

Multi point fuel injection petrol engine.Engine is rear mounted.

1st time a 2-cylinder gasoline engine

was being used in a car with single

balancer shaft.

Anti-vibe balancer shaft

Safety features for Tata Nano

The 1 Lakh car:

Sheet metal bodyCrumple zones

Intrusion resistant doors

Seat belts

Strong seats and anchorages

Rear tailgate glass bonded to the body.

Tubeless Tyres

How green is Tata Nano?Tailpipe emission exceeds current

regulatory requirements

Lower overall pollution level than two-

wheelers

Fuel efficient (20 km/litre), ensures low

carbon dioxide emissions.

Front BonnetHolds Battery,Wind-Shield washer

bottle,Room for single suitcaseSpare wheel


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Porters Five Force Model For TATA

NANO


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Porters Five Force Model For TATA NANO

1. COMPETITIVE RIVALRY

y Number of Competitors

y Price Competition

y Exit Barriers

y Product Quality

Very

lowLow Neutral High

Very

High

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5


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2. BARRIERS TO ENTRY

y Time and cost of entry

y Knowledge and Technologyy Product Differentiation and

CostAdvantage

y Government Policy and

Expected Retaliationy Access to Distribution Channels

Very

lowLow Neutral High

Very

High

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5


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3. BARGAINING POWER OF

BUYERS

y Switching Costs

y Number of customers

y Brand Image

y Price sensitivity

Very low Low Neutral High Very High

1 2 3 4 5

1 2 3 4 5

12 3 4 5

1 2 3 4 5


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4. BARGAINING POWER OF

SUPPLIERS

y Number and Size of

Suppliers

y Unique Service / Product

y Ability to substitute

Very

low

Low Neutral HighVery

High

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5


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5. THREAT OF SUBSTITUTE

y Price band

y Substitutes performance

y Buyers willingness

Very

lowLow Neutral High

Very

High

1 2 3 4 5

1 2 3 4 5

1 2 3 4 5


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Conclusion on Five force analysis - Nano

Five force factors Rating

Competitive Rivalry High

Barriers to entry Very High

Bargaining power of

buyersVery Low

Bargaining power ofsuppliers Low

Threat of substitute High


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SWOT ANALYSIS OF TATA NANO

STRENGTHS

WEAKNESS

OPPORTUNITIES

THREATS

FIRST INNOVATION

41 PATENTS FOR

INOVATION

LOW PRICE AND STYLISH

ENVIRONMENTAL

FRIENDLY

HIGH FUEL EFFICENCY

INTERNAL SPACE

(21%MORE THAN M-800)

EXTERNAL SPACE

(8%LESS THAN M-800)

TESTED SUCCESSFULLY

FOR CRUMPLE ZONES

LESS BOOT SPACE

NO HEADLIGHT

LEVELERS

NOT FIT FOR HILLYTERRAIN

POOR TRACTION

CONTROL

POOR ENGINE COOLING

& HENCE OVERHEATING

NO PASSENGER SIDE

MIRRIOR

DIESEL AND ELECTRICVARIANT

RECESSION

AUTO FINANCE

NEW COMPANIES-

BAJAJ,CHERY

REVA-AN ELECTRICCAR

INCREASE OF TAXES

IN METRO CITIES

RISING COST OFMATERIALS

STRICT EUROPEAN

SAFETY STANDARDS


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Thank You

presentation 5force model 18grp

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