What Is Porter's Five Forces Of BMW

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3. Market Analysis 3.1 Porter’s Five Forces Analysis Michael Porter 's five forces are quite old and well-known model of determining the current attractiveness of the industry for the company. Porter’s five forces model suggests that competition in an industry is rooted in its underlying economic structure and goes beyond the behavior of current competitors (Porter, 1980). The stage of competition depends upon five basic competitive forces, which determine the degree of competition and the profit potential in an industry. The five forces are (a) intensity of competitors, (b) power of suppliers, (c) power of customers, (d) threat of new entrants and (e) threat of substitute products (Porter, 1980). Porter identified five forces that affect the company in the industry and its profit: Porter’s 5 Forces for BMW Competitive Rivalry: VERY HIGH Competitor Balance BMW, Audi and Mercedes-Benz engage in intense cut-throat competition to become the world’s luxury car leader (Automotive-news, 2013). All 3 have the same target market and similar positioning. Since 1990s, the title of world luxury car leader has changed hands from one company to another. BMW just regained the title from Audi, and has been constantly running its operations at full capacity to keep ahead of the rest (Marketinomics, 2012). High Exit Barriers It is very difficult for a company to exit the premium automobile industry as each company holds strong long-term commitments to their
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