In terms of Porter’s model, how has the expansion into electric vehicles changed the automobile market?a.)The competitive rivalry has increased.b.)The buying power of customers is stronger.c.)The government power has increased.d.)The supplier power has weakened.
Question
In terms of Porter’s model, how has the expansion into electric vehicles changed the automobile market?a.)The competitive rivalry has increased.b.)The buying power of customers is stronger.c.)The government power has increased.d.)The supplier power has weakened.
Solution
a.) The competitive rivalry has increased: With the expansion into electric vehicles, the automobile market has seen an increase in competition. Traditional car manufacturers are not only competing with each other but also with new entrants like Tesla. Moreover, technology companies such as Google and Apple are also showing interest in this market, further intensifying the rivalry.
b.) The buying power of customers is stronger: As more and more manufacturers enter the electric vehicle market, customers have a wider range of options to choose from. This increases their buying power as they can easily switch from one brand to another. Additionally, as the technology becomes more mainstream, the prices of electric vehicles are expected to drop, further strengthening the buying power of customers.
c.) The government power has increased: Governments around the world are pushing for a shift towards more sustainable forms of transportation. They are implementing policies and regulations that favor electric vehicles, such as tax incentives for buyers and stricter emission standards for manufacturers. This increases the government's power in the automobile market.
d.) The supplier power has weakened: The shift to electric vehicles has changed the dynamics of the supply chain in the automobile industry. Traditional suppliers of parts like engines and transmissions may lose their bargaining power as the demand for these parts decreases. On the other hand, suppliers of batteries and other components specific to electric vehicles may gain power. However, as manufacturers like Tesla are opting to produce these components in-house, the overall supplier power may have weakened.
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