Question

Analyse the mini case regarding German luxury cars using the five competitive forces to determine the industry’s attractiveness.

Answer 1

The German luxury cars are one of the best in the world.They provide superior performance along with luxury. The concerned brand are Mercedes, BMW, Audi, etc.

The fice forces are descrided below:-

1. Threat of new entry - This segment is very tough for the new manaufacturer to enter into. It requires huge funds to enter in this market and gaining the good image in the eyes of the customer is difficult task.

2. Competitive rivalry - There is a huge competition among Mercedes, BMW and Audi. They try to enter into each other's segment. They advertise their product heavily. So, the level of competition is high.

3. Supplier's power - As the number is very less, they can make the price. So, supplier have more powers.

4. Buyer's power - As the number of buyers are large, they take the price and hence the power is less.

5. Threat of substitution - This is the force by which a customer can substitute the product. As the number of supplier is less threar of substitution is less.