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Competitive Analysis: Porter's Five-Forces Model: Rivalry Among Competing Firms

Competitive Analysis: Porter’s Five-Forces Model Toyota's Lexus, Volkswagen Audi, Daimler's Mercedes-Benz, Honda's Acura, GM's Cadillac, Volvo, and Nissan's Infiniti are BMW's main competitors in the automobile industry. Competition is high as buyers can easily switch brands and prices are regularly compared. While market entry barriers are high due to regulations, costs, and brand loyalty, substitute products pose a threat as other automakers offer lower-priced options. However, BMW's global production and dealership network reduces supplier bargaining power, and strong brand reputation and quality provide some protection against consumer power despite competitive prices.

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332 views

Competitive Analysis: Porter's Five-Forces Model: Rivalry Among Competing Firms

Competitive Analysis: Porter’s Five-Forces Model Toyota's Lexus, Volkswagen Audi, Daimler's Mercedes-Benz, Honda's Acura, GM's Cadillac, Volvo, and Nissan's Infiniti are BMW's main competitors in the automobile industry. Competition is high as buyers can easily switch brands and prices are regularly compared. While market entry barriers are high due to regulations, costs, and brand loyalty, substitute products pose a threat as other automakers offer lower-priced options. However, BMW's global production and dealership network reduces supplier bargaining power, and strong brand reputation and quality provide some protection against consumer power despite competitive prices.

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Imthe One
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Competitive Analysis: Porter’s Five-Forces Model

Rivalry Among Competing Firms


Toyota’s Lexus, Volkswagen Audi, Daimler’s Mercedes-Benz, Honda’s Acura GM’s
Cadillac Corporation, Volvo Car Corporation, and Nissan’s Infiniti are the biggest
competitors we have in automobile industries.
Toyota’s Lexus competes directly with our BMW and Lexus sales were up 23
percent in the USA in 2012.
Volkswagen Audi offers a computerized control system for its car, called multi
media interface and this advancement came amid the criticism with our iDrive
control.
Daimler sells its vehicles in 40 countries and Mercedes-Benz’s U.S sales surged 11
percent in January 2013, in its effort to overtake BMW in luxury-auto deliveries
Volvo manufactures and markets a wide range of vehicles, some that compete
with us.
As a result, competition among competing firms is high since buyers can simply
switch brands and compare to prices. BMW, for example, has one of the highest
prices in the automobile industry, and advertising and price wars happens
between the competitors.

Potential Entry of New Competitor


New entrants will find it difficult to break into the automobile industry because
there is already intense competition between big companies, increasing
government regulations may raise the costs, a large amount of capital with
technological advancement, and a strong brand preference that will require a
large amount of money for advertising and the customers' loyalty to the existing
big companies in the industry.
With the high entry barrier for the new competitors, the threats for potential
entry of new competitor is low.
Potential Development of Substitute Products
Threats for substitute products is high, our company's product portfolio is
primarily comprised on automobiles, including small to medium luxury vehicles
and a crossover series. To differentiate its offers, we do not provide pickup trucks,
light and heavy commercial vehicles, or buses. BMW does not own any
automobile brands aimed at lower- and middle-income consumers who cannot
buy luxury automobiles. But other automobile company provides a much lower
price compare to what we sell into the market and with the wide scale of low-
price market where customers are looking for much cheaper price to buy is a big
threat for BMW specially with the intense competition going on and some of our
competitors can sell low price vehicles.

Bargaining Power of Suppliers


The bargaining power of supplier is in low threats because our BMW Group
operates 29 production and assembly facilities in 14 countries and we also have a
global dealer network in more than 140 countries, this gives us an edge by
reducing the power of our suppliers.

Purchasing Power of Consumers


Brand recognition and positive reputation are directly tied to brand value, we are
known for manufacturing well-engineered automobiles that provide a level of
luxury driving that few other brands can match. Our company was listed in Forbes
magazine as the number-one most reputable company in the world and this
ranking are based on aspects such as "people's willingness to buy, recommend,
work for and invest in a company.” But the threats for the bargaining power of
customers is at moderate level because there are still consumers who will
consider analyzing the price and we also have competitors who also sells luxury
cars with almost or less price than what we sell.

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