Question Details

(solution) In 2009 the American auto industry was in a dire economic state.


In 2009 the American auto industry was in a dire economic state.  Chrysler was in Chapter 11, GM was on the brink of bankruptcy, and Ford?s future was at best uncertain.  The demise of the U.S. auto industry would have a devastating impact on our national economy and specifically the economies of Michigan and Ohio.

Economists occasionally use Porter's five forces framework when making a qualitative evaluation of a firm's strategic position.  According to Porter, his model should be used at the industry level, defined as a marketplace in which similar or closely related products or services are marketed.  This research paper requires the application of Porter?s Five Forces Model to the auto industry. 

Porter's analytical framework consists of those forces that affect a producer?s ability to serve its customers and make a profit.  A change in any of these five forces requires a re-assessment of the marketplace.  The five forces include:

      1)    The threat of substitute products: The existence of close substitute products (i.e., high elasticity of demand) increases the propensity of customers to switch to alternatives in response to price increases.

2)    The threat of the entry of new competitors: Unless there are significant barriers to entry, profitable markets that yield high returns will attract firms (i.e., perfect competition), effectively decreasing profitability. 

3)    The intensity of competitive rivalry: As in the case of oligopoly markets, rivals may choose to compete aggressively, non-aggressively or in non-price dimensions.

4)    The bargaining power of customers: The ability of customers to put the firm under pressure due to availability of existing substitute products, buyer price sensitivity, uniqueness of the products, etc. 

5)    The bargaining power of suppliers:  The cost of factors of production (e.g. labor, raw materials, components, and services such as expertise) provided by suppliers can have a significant impact on a company's profitability.  As such suppliers may refuse to work with the firm or charge excessively high prices for unique resources. 

Develop a detailed paper applying Porter?s Five Forces Model to the American automotive industry.  

Your paper needs to include at least three scholarly sources

3050 words, in APA format and structured as follows:

1.            Cover page with a running head
2.            Abstract
3.            Introduction to the Auto Industry
            3.1.            Industry Definition
            3.2.            Industry Profile
            3.3.            Industry Structure
            3.4.            Future Outlook

4.            Porter's Five Forces Strategy Analysis as it applies to the Auto Industry
            4.1.            Bargaining Power of Buyers
            4.2.            Bargaining Power of Suppliers           
            4.3.            Competitive Rivalry in the Industry
            4.4.            Threat of New Entrants
            4.5.            Threat of Substitutes

5.            Conclusion
6.            References



ECON 600 Research Project 2 Rubrics

 

Score

 

Criterion

 

Unsatisfactory

 

15%

 

Identification

 

Did not fully

 

of auto

 

identified the

 

Industry

 

auto industry

 

structure 35% Identification

 

of Porter?s Five

 

Forces Did not identify

 

all five forces. 15% Identification

 

of Application

 

of Porter?s Five

 

Forces to auto

 

industry Did not clearly

 

identify an

 

appropriate

 

application of

 

each concept

 

identified in the

 

scenario. 10% Demonstrate

 

Critical

 

Thought in

 

Analyzing

 

Information 10% Demonstrate

 

Quality and Does not

 

demonstrate

 

critical thought

 

in the analysis

 

of the

 

information, or

 

analysis is

 

disjointed

 

Written

 

communication

 

is ineffective, Satisfactory

 

Identified the

 

auto industry

 

structure

 

correctly. Exceptional

 

In addition to

 

meeting the

 

requirements of

 

satisfactory,

 

provided an

 

analysis of market

 

structure

 

requirements

 

including number

 

of firms,

 

uniformity of

 

products, ease of

 

entry and exit.

 

Identified all

 

In addition to

 

five forces.

 

identifying all five

 

forces provided

 

the detail for

 

relating them to

 

the requirement

 

of market

 

structure.

 

Clearly

 

In addition to

 

identified an

 

meeting the

 

appropriate

 

requirements of

 

application of satisfactory, for

 

each concept

 

each concept

 

identified in

 

identified, defined

 

the scenario.

 

at least one

 

future

 

opportunity.

 

Demonstrates In addition to

 

critical

 

meeting

 

thought in

 

requirements of

 

analyzing the satisfactory,

 

information by synthesizes

 

presenting

 

information

 

various

 

across concepts

 

perspectives

 

effectively

 

on the

 

concepts

 

Written

 

In addition to

 

communicatio meeting the

 

n is effective

 

requirements of 10% 5% Effectiveness

 

with numerous

 

in Written

 

spelling and

 

Communication grammatical

 

errors or poorly

 

constructed

 

sentences

 

Numerous errors

 

Adhere to APA

 

in format, style,

 

Writing Style

 

or reference

 

Requirements

 

citation

 

Citation

 

Did not provide

 

an appropriate

 

citation. satisfactory, the

 

paper is engaging

 

to the reader with

 

concise and clear

 

communication

 

Few errors in

 

format, style,

 

or reference

 

citation

 

Provided an

 

appropriate

 

citation Virtually no errors

 

in format, style,

 

or reference

 

citation

 

N/A

 


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