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Automobile Industry Analysis - Pestle, Porter and Swot Analysis

Essay by   •  June 5, 2011  •  Case Study  •  1,237 Words (5 Pages)  •  2,187 Views

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PESTE Analysis is a simple, useful and widely-used tool that helps managers or decision makers to understand the Political, Economic, Socio-Cultural and Technological and Environmental aspects to build their vision of the future (encyclopedia).

Political

Federal government regulations and laws play an important role in an automobile industry. Laws and regulations have affected the automobile industry since the 1960's. Mostly all the laws and regulations concerning auto industry are implemented keeping consumers, environment and safer automobiles in mind. Van Tuyl Group follows government restriction, anti-corruption implementation and guideline as restricted by the government.

Economics

The automobile industry has a tremendous impact on every country's economy. Automotive industry uses everything from the aluminum to lead to vinyl to manufacture their products. Hence provide jobs and business to other industries. The study showed that for every autoworker there are seven other jobs created in other industries.

Social

As part of the growth in automotive industry, Van Tuyl Group actually affects the society as a whole. The company promotes their social responsibility by bringing traffic safety standard training to its customers. Van Tuyl has also developed a recycling and recovery project in their vehicle components department to further encourage people from waste management issues.

Technology

The technology has affected just about every industry in the world and has also had a huge impact on the automobile industry. Technology has been dealerships best selling point as more and more people are going online to research, test and buy their vehicles. Business-to-business marketplaces have also given the industry many opportunities because of the internet, such as more efficiency and lower cost. Technology also plays a vital role from manufacturing to assembling auto parts in automobile industry.

Environmental

The automobile industry has been through really tough times due to the weak economy, increasing fuel prices, social and political environmental concerns and issues. In order to survive during tough times, Van Tuyl Group focused on manufacturing and selling alternative fueled vehicles, for example, fuel cell, electric, and hybrid.

Porter's Five Forces:

Threat of New Entrants

The threat of new entrants is relatively low in the automobile industry. This 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.

Bargaining Power of Suppliers

The bargaining power of suppliers is pretty low in the automobile industry. There are so many parts needed to manufacture an automobile, that it takes many suppliers to complete this. There are lots of suppliers available to this industry that manufactures can easily switch to another supplier if it is essential.

Bargaining Power of Buyers

The bargaining power of the buyers is reasonably high. The company depends on consumers to stay in business. Due to the tough competition in this industry, there is always a risk losing the costumers to their competitors. The buyers have low switching cost if they are not happy. They can sell their car and purchase a new one anyone. Therefore, it is very important to keep the customers happy.

Threat of Substitute Products

There are not many substitute products for automobiles. Some of the substitutes are walking,

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