The porter's 5 forces is an effective tool to evaluate an industry. The threat of new entry examines the economic and political environment, requirements and difficulties that a business owner might face from choosing the industry; the degree of rivalry prepares potential owners to face competitors in the market by knowing the demand of customers. Knowing the Bargaining power of suppliers and buyers also show new competitors what are they going to expect after entering the industry. To conclude, the porter’s 5 forces help potential competitors to draw a picture of the current condition of the industry from different aspect which provide them the information to determine whether do they prepared to enter the market, what kind of difficulties or competitors they will face, their market position at the beginning, the attractiveness of their product or service, etc.
The mobile industry is considered to have a high barrier entry. First of all, it requires a lot of resources to manufacture a car and maintain a product line. Since the mobile industry has been existed in the 18th century, there are already many famous and strong competitors in the field. Companies such as BMW, TOYOTA, HONDA, they are all well known and experienced. Most importantly, government has already passed a lot of regulations to ensure car safety over the year.
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Do you consider BMW and Toyota to be competitors? The cars that each produce target different sectors of the market.. Just a thought
Yesterday night, I asked my boyfriend this question and he said the automobile industry had high barrier to industry because it requires alot of capital and there is already competitors out there like you mention. If it was a BMW or a new car, he would of course choose the BMW.
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