Question

Using Porter’s Industry Competitive Model, what forces are determining long-term industry attractiveness in the self-driving car marketplace? Discuss in depth.

Answer 1

Solution:

Porter has given a model to find the attractiveness of the industry and this model is known as Porter's five forces model. This model evaluates the industry based on the five criteria and these are given below

1. Bargaining power of the buyer: Bargaining power of the buyer is low as of now as there are very few companies that are into this industry as of now e.g. Tesla. But going forward it is expected that various company will enter into the market and then the bargaining power of buyer can increase as they will have various options to chose from

2. Bargaining power of supplier: Bargaining power of the supplier will be low as they will have contracts from the car manufacturer and the car manufacturer can make the auto ancillary parts on their own. The car maker will have many options to chose from, as there will be many suppliers.

3. Threats of substitution: This will be high because the customer will have option to buy the traditional car as well chose the public transport.

4. Threats of new entrants: This will be moderate as there are many automobile companies that can enter the market based on the lucrativeness of the industry. There are traditional car makers who can enter this industry by the help of innovation and technology

5. Rivalry Among Existing Firms: This is high because there are many firms and they will create a fierce rivalry to gain the market share as this is the new industry and every firm will want to have the higher market share.