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Porters Competitive Forces: Nissan

Paper Type: Free Essay Subject: Marketing
Wordcount: 997 words Published: 8th May 2017

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Five Forces model of Micheal Porter is a very clear describe concept for measure companys competitive position.Frame network is provided by Micheal Porter that five forces is influence industy and therefore implicitly also business.Michael Porter’s Five Forces model is frequenly used when strategic planning. Porter’s competitive five forces model is widely used business strategy tools and it have prove usefulness in numerous situations when exploring strategic management models.

Nowadays, Nissan have encounter Porter’s Competitive Forces Model that is new market entrants, substitute products, bargaining power of suppliers,bargaining power of customer and also traditional competitor. In this report, we will discuss the power of supplier, traditional competitor, new market entrants and also substitute product

Porter’s Competitive Forces Model

3.1 Power of supplier

A car is complex product made up of a large number of components or accessory, as many as few thousand thousand of them. Nissan needs to hold the quality of each component to increase the quality of the final product, therefore Nissan neecods to search for supplier to supply Nissan components or accessory, but sometime Nissan will encounter the problem of power of supplier. In some exception condition like when Nissan have earn a large profit, supplier would consider increase the cost of supply components to Nissan, because supplier also wish to earn some shares of profit earning of Nissan. Besides that, supplier also will increase the cost of supply when Nissan immediately require some of the important components.

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In order to solve the problems that face by Nissan, Nissan have search many supplier to supply components to Nissan, when there is a shortage of supply or increased cost of a supplier, Nissan can get the components from other supplier in order to solve the problem of power of supplier and Nissan also needs to consider about the switching cost of supplier. Nowsaday, 70 or 80 percent of parts of Nissan car is provided by suppliers and Nissan get components of car part from around five thousand suppliers.

3.2 Substitute Product

The world is now becoming more advance and high-tech, this also means nowadays car is now become more advance and more high tech, for example, car is no longer needs petrol as the fuel, it use water, solar or even electric auto as the fuel to enable the car to drive on the road. This improving of technology has causes one of the porter’s competitive forces model- substitute product to Nissan. Buyer of car will prefer a car that used water, solar or electric auto as fuel because a project Green Mobile has launched, and this project involves Eco-friendly vehicles and had attractive many buyer of car that support eco-friendly.

In order to solve the problem, Nissan will develop a new kind of car which is called the smart car. By collaborating with Google, the concept which is similar with an airplane is used to create this brand new car with a new function called the Auto-Drive, which is, the car will now be the driver and will drive the passenger onboard to their desired location just by accepting the address from the passenger. From numerous researches done by Nissan, the cause of road accident is mainly insufficient of sleep and carelessness of the driver. Auto-Drive will be developed to counter this phenomenon. The GPS built-in the car will give the car an up-to-date route to reach their destination as soon and as safe as possible.

3.3 Traditional competitor

Nowadays, the global automakers are facing strongly competition, Nissan is the one of brand in automaker, it not only facing the same local competitor such as HONDA, TOYOTA but also facing other country’s competitor such as the US big three: General Motors, Ford and Daimler Chryler. Although there are many strong companies in the world, but Nissan is one of the most profitable automakers in the world.

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A strategic alliance with French automaker Renault has proven to benefit the Nissan Company. Nissan is trying to further increase profitability and has set its sights on gaining market share against industry leaders like Toyota. In Porter’s Generic Strategies, Nissan has try to apply one of the strategies it is the product differentiation, Nissan has established a plan to develop efficient, alternative-energy and hybrid powered vehicles in order to compete with alternative-energy auto leaders Toyota and Honda for the increasingly important alternative and renewable energy auto market.

3.4 New market entrants

Recently, Chinese-made cars have been weaving through the roads in many of countries Strip as private cars or taxicabs .The Chinese cars, mainly Chery Automobile’s Speranza and others like JAC and Geely, become the new entrants in the global market. There are many of automakers also have involve in this new entrants problems, Nissan company is the one of them.

According of Porter’s competitive, Nissan try to apply one to the strategic it is Low-cost leadership. Renault-Nissan calls off low cost car was project with Bajaj Auto of ultra-low cost car, as it looks for options in countries such as China and Russia. As per an agreement reached between Renault-Nissan alliance and Bajaj Auto, the Indian automaker was supposed to design, develop and manufacture the product, which was intended as an ultra low cost car, while the alliance would sell it under their budging so that ,Nissan can fight with the Chinese-made cars.

In the other hand Nissan despite being a latecomer to the field, Nissan has monetary incentives on its side: the current industry-wide system of federal tax credits given for the sale of hybrid vehicles will cease to apply to Honda and Toyota cars after these companies sell a certain (and rapidly approaching) preset number of hybrid cars.


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