Porter's Five Forces for Eagle Motors Ltd in Australia.
Eagle Motors Ltd is a well-established Swedish Car Manufacturing Company, which will be competing in the automotive industry in Australia. To succeed, Eagle Motors Ltd needs to have a fine competitive strategy to compete with other car industry in Australia.
Michael Porters Five Forces was used in a lot of industry as it states the rules of competition (Robbins et al. 2006). Porters Five Forces Model can provide a detailed analysis of the competitive nature of the Australian car industry and helps in assessing the competitive strength and position of the company in the market. A successful competitive strategy is also a purpose of the attractiveness of the industries in which the firm competes and of the firm's relative position in those industries (Zhao. 2005). Porters five forces are the threat of entry of new competitors, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers and the rivalry between the existing competitors.
Threat of New EntrantIn a market, when firms are making profit, there will be new entrants to the market sequentially to gain profit as well (WordPress. 2007). They characteristics may be economies of scale, capital requirement, switching costs, access to distribution, government policy and brand identity (Power. 2007).New entrants add capacity and can lead to price wars or cost increases to maintain market position. When it is easy for new entrants to establish themselves in a market, profit potential is reduced (Subra. 2008). However, as Eagle Motors Ltd has adequate financial resources, the threat of new entrant towards Eagle Motors Ltd is very low. The industry is very mature and it has successfully reached economies of scale. In order to compete in this industry a manufacture must be able to achieve economies of scale (Baki et al. 2004). Currently, the three largest car...