Submit an analysis of Ford utilizing Porter’s Five Forces Model.

Submit an analysis of Ford utilizing Porter’s Five Forces Model.

Additional information

The Five Porter’s Forces are analytical tools that can be utilized to determine a market segment’s profitability. An adequate analysis using the technique can explain why some organizations make profits, or why some find it difficult to cope with the business environment. The five forces are power of suppliers, power of buyers, threat of entry, threat of substitutes, and rivalry among existing competitors. An industry’s profitability is influenced by the happenings within the particular industry players, including new ones who intend to join the industry. The buyers’ power pertains to the bargaining influence which purchasers have over the sellers, thus attracting lower prices (Porter, 2008). An industry with high buyer power is less profitable since profits will be cut.

Competition would refer to industry players’ activities that can undercut the earnings of their rivals (Porter, 2008). Competitive industries are less profitable compared to less competitive ones since many players can attract customers with better deals, hence sharing profits. Potential entrants can also threaten established players’ influence, especially where entry barriers are low (Porter, 2008). Industries with high entry barriers are more profitable for established firms due to their increased ability to manipulate the customers (Porter, 2008). Supplier power refers to the ability of suppliers of factors of production to drive up the costs of their services and products. Industries with high production costs are less profitable, especially where switching costs are also high, reducing profitability. The presence of substitute products can also affect the profitability of an industry, especially where firms produce similar products. Industry players with no or close substitutes are more likely to increase prices, thus improving their profitability (Porter, 2008). On the other hand, markets with several or close substitutes attract fewer profits due to high chances of switching between suppliers.