Business-to-business network----just in time
As far as manufacturing was concerned, considering that a typical automobile was made up of more than 20,000 parts provided by about 200 suppliers, all due to be delivered ‘just-in-time’, a business–to-business net work looked remarkably useful.
Question 2. Using Porter’s 5 forces framework analyse competitiveness in the automobile industry in 2000. What future changes can you foresee through an analysis of the external environment?
I will apply Porter’s five forces framework to the segmentation of luxury cars in automobile industry in this question. The five forces framework helps identify the sources of competition in an industry or sector. The five forces are the threat of entry, the threat of substitutes, the power of buyers, the power of suppliers and competitive advantage.
The threat of entry:
The threat of entry is high in luxury cars segmentation. They need high technology to produce the luxury cars. And the capital requirement of entry is quite high as well.
The threat of substitutes:
The threat of substitute is high.
The power of buyers:
The power of buyers in luxury cars segmentation is tending to be low. There are few alternative resources of supply. Because comparing with other kinds of cars there are only few manufacturers produce luxury cars. And we know that not everybody can afford luxury cars, and the persons who can afford luxury cars won’t buy 3 or 4 at once or change them to a brand new luxury car in one month. So we can see that the volume purchase of the buyers is low. This is another reason to the low power of buyers.
The power of suppliers:
The power of supplier in luxury cars segmentation is low. A typical automobile was made up of more than 20,000 parts provided by about 200 suppliers. We can see that there is no concentration of supplier. A large number of companies doing the same technology, there’s a lot of choices for the manufacturers of automobile. Also, the switching cost is low among the numbers of suppliers.
Competitive rivalry:
The competitive rivalry in luxury cars segmentation is high. The extent of luxury cars competitors are in balance. They have roughly equal size. There is the danger of intense competition as one competitor attempts to gain dominance over another. And also the product differentiation is not distinct. It makes the competition among the luxury cars manufacturers is high.
By using the Porter’s five forces framework to analysis the external environment, we can see that the threat of entry is high, the threat of substitutes is high, the power of buyer is tending to be low, the power of suppliers is low, and the competitive rivalry is high. We can foresee that
Question 3. What are the critical success factors in the market segments in which BMW competed? Did BMW posses the strategic capability to compete at that level and acquire a sustainable competitive advantage?
I will choose the luxury cars markets as my segmentation in which BMW compete in this question.
The critical success factors in the luxury cars segmentation:
- Highly qualified labour force. In the twenty-first century, the scarce resources that most influence national competitiveness are likely to be the skills displayed by the workforce. One of Germany’s distinctive national resources was a highly qualified labour force that could be used by German manufacturers as a source of competitive advantage. Most of such advantage went to companies such as BMW, managed to build a perception of valuable differences in the minds of their buyers.
- The BMW brand. BMW had traditionally taken great pride in the quality of its engineering. And BMW employed a highly skilled German labour force, so they get the benefits of a reputation for high-quality products.
Question 4. What are the bases of BMW’s strategy? What core competence did it posses?
Question 5. Briefly compare and contrast Porter’s view on competitive positioning with Barney’s resource based view.