Five Force

Five Force

It's a college level management/marketing class question.

Here you go:

Threat of New Entrants - Very Low
In order to enter the automotive market a huge amount of capital is required. In addition, an entering firm would need to have a tremendous amount of tacit and explicit knowledge to design and manufacture products.

Threat of Substitutes - Medium
Available substitutes include public transportation such as buses, trains, boats, and aircraft. In addition, consumers can use other conventional means of transportation such as bicycling or walking.

Power of Suppliers - Medium
Some suppliers are smaller and as such do not have that much power over the pricing and distribution of their products. However, there are not that many small parts manufacturers in this market and therefore, the majority of suppliers to major automotive makers are medium to large businesses. As a result they have some flex in determining product pricing, delivery, and distribution.

Power of Buyers - Medium
While buyers are individuals and are not grouped together, they still have an immense amount of information available to them regarding the pricing and cost to manufacture a BMW. As a result, buyers do have some leverage in being able to negotiate a purchasing price from BMW.

Competitive Rivalry - Extremely High
Any competitor in this market is generally a global company with billions of dollars in assets and can compete on any level that BMW can. Furthermore, there is intense competition on all fronts in the car market in general, not to mention the luxury car market. Major manufacturers such as Toyota and Honda are pinching BMW with their luxury segments (Lexus & Acura) in terms of quality product and reliability.
Ex BMW service advisor and I've done a million porter analysis' in my undergrad and grad classes.

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