There have been several competitive forces which have contributed to the positive growth of Auto Industry in the United States. In this article we will discuss the impact of these forces.
U.S. Automotive Industry
There could be several forces that may have affected the auto industry in the US. We restrict our discussion to the following factors Supplier Power, Buyer Power, Competitive Rivalry, Threat of Substitution and
Threat of New Entrants.
Before analyzing the competitive factors which may have fueled the growth of the automotive industry it is important to know that the history of the Automobiles can be divided into five eras Vintage era, Pre WWII era, Post War era and modern era.
Among all the factors Buyer power was one of the major factors in the growth of the U.S. automotive industry in its earlier phases because one of the major buyers was US army which was able to fund the research and buy the cars during the world war era.
Before the world war era the growth of industry and hence the industrial revolution was one of the other reason for the growth of auto industry , moving commodities produced at one state to another required automobiles and this helped shaped the automotive industry.
The economic stability of US government also helped in the development of the auto industry as it was able to support this industry. As the US government and policy makers realized the importance of the automobile it development was further pushed and several legislations were passed to enhance the development of the cars and hence helping the automotive industry. Even after all these governmental initiates it could not have been possible without the buying power of the customer that the auto industry saw its tremendous growth.
The World War II helped create a scenario where are lot of Research and development was made to improve the cars, this may be considered as one of the largest factor in the development of the auto industry in US.
It is important to know that throughout the veteran car era, however, automobiles were seen a novelty rather than an authentically useful device. The cars manufactured during this era consumed lot of gas and broke down frequently and was obviously expensive and common people were not able to afford it. It was not until the long drive by Bertha Benz in 1888 that made people aware of the importance of this invention.
Competitive Rivalry could be the second major reason of the growth of automotive industry. In the earlier phases of the U.S. automotive industry there were several companies that tried to manufacture automobiles they spend great deal of effort in building new and improved designs with fuel efficient and unique engine designs but today there are only three large automotive companies that rule the U.S. Auto industry. The competition among these companies produced better cars with cheaper prices and more luxury. The other companies ended in failure of were bought out by the larger and financial better off companies. The reason of failure could also be attributed to the fact of poor designs and bad marketing efforts.
Threat of Substitution and Threat of New Entry are other important factors in the recent history of US automotive industry. Today the major auto manufactures in USA are General Motor, Ford and Chrysler. In the past only those automotives companies were able to survive which came up with new designs and produced cars which were economical and liked by the people based on the comfort and style, these companies struggled big time to stay on top and avoided substitution by other companys designs and this way avoided the new entrants into the market.
The failure of Ford can be related to this scenario because it produced designs that were not liked by the consumer and the Japanese automobile Toyota and European makes who were the new entrant also increased the competition and slowed the growth and business of Ford.
Today the competition that drives the market is the electric vehicle and it is because of the several laws that have passed and only companies which will be able to produce promising and better automotive designs would survive.
In this essay we discussed the growth of automotive industry in the US and the competitive factors between the companies that may have affected the growth. It can be easily seen that the Competitive Rivalry and Threat of New Entrants were the major factors that fueled the growth of this industry and in the future competitive rivalry would play a large role in the automotive industry growth.
U.S. Automotive Industry
There could be several forces that may have affected the auto industry in the US. We restrict our discussion to the following factors Supplier Power, Buyer Power, Competitive Rivalry, Threat of Substitution and
Threat of New Entrants.
Before analyzing the competitive factors which may have fueled the growth of the automotive industry it is important to know that the history of the Automobiles can be divided into five eras Vintage era, Pre WWII era, Post War era and modern era.
Among all the factors Buyer power was one of the major factors in the growth of the U.S. automotive industry in its earlier phases because one of the major buyers was US army which was able to fund the research and buy the cars during the world war era.
Before the world war era the growth of industry and hence the industrial revolution was one of the other reason for the growth of auto industry , moving commodities produced at one state to another required automobiles and this helped shaped the automotive industry.
The economic stability of US government also helped in the development of the auto industry as it was able to support this industry. As the US government and policy makers realized the importance of the automobile it development was further pushed and several legislations were passed to enhance the development of the cars and hence helping the automotive industry. Even after all these governmental initiates it could not have been possible without the buying power of the customer that the auto industry saw its tremendous growth.
The World War II helped create a scenario where are lot of Research and development was made to improve the cars, this may be considered as one of the largest factor in the development of the auto industry in US.
It is important to know that throughout the veteran car era, however, automobiles were seen a novelty rather than an authentically useful device. The cars manufactured during this era consumed lot of gas and broke down frequently and was obviously expensive and common people were not able to afford it. It was not until the long drive by Bertha Benz in 1888 that made people aware of the importance of this invention.
Competitive Rivalry could be the second major reason of the growth of automotive industry. In the earlier phases of the U.S. automotive industry there were several companies that tried to manufacture automobiles they spend great deal of effort in building new and improved designs with fuel efficient and unique engine designs but today there are only three large automotive companies that rule the U.S. Auto industry. The competition among these companies produced better cars with cheaper prices and more luxury. The other companies ended in failure of were bought out by the larger and financial better off companies. The reason of failure could also be attributed to the fact of poor designs and bad marketing efforts.
Threat of Substitution and Threat of New Entry are other important factors in the recent history of US automotive industry. Today the major auto manufactures in USA are General Motor, Ford and Chrysler. In the past only those automotives companies were able to survive which came up with new designs and produced cars which were economical and liked by the people based on the comfort and style, these companies struggled big time to stay on top and avoided substitution by other companys designs and this way avoided the new entrants into the market.
The failure of Ford can be related to this scenario because it produced designs that were not liked by the consumer and the Japanese automobile Toyota and European makes who were the new entrant also increased the competition and slowed the growth and business of Ford.
Today the competition that drives the market is the electric vehicle and it is because of the several laws that have passed and only companies which will be able to produce promising and better automotive designs would survive.
In this essay we discussed the growth of automotive industry in the US and the competitive factors between the companies that may have affected the growth. It can be easily seen that the Competitive Rivalry and Threat of New Entrants were the major factors that fueled the growth of this industry and in the future competitive rivalry would play a large role in the automotive industry growth.
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