Porters five forces analysis Michel Porter identified five forces that influence an industry [porters Five Forces

model has been explained in detail in Exhibit:1]. We will analyze the model from Fords perspective. The first factor is The degree of Rivalry; India is majorly a hatchback and sedan market. The SUV segment is comparably small. There a few existing competitors that have brand names in this market who also compete in terms of the market and the pricing of the vehicle. These are: Maruti Udyog Limited, Renault, Mahindra and Mahindra Automotive Industry, Honda, Tata Motors, and Force Motors Ltd. The next factor identified by porter is the Threat of Substitute Products The Indian consumer is price sensitive. Ford EcoSport is priced ad at Rs. 5.59 lakhs1 which makes it one of the most reasonable compact SUVs. Its most notable competitors within similar price range includes Renult Duster, Maruti Suzuki Ertiga, Maruti Suzuki Desire, Mahindra & Mahindra Quanto, Honda Amaze, Premier Rio, Mahindra Thar, Tata Sumo, Mahindra Bolero, and Chevrolet Enjoy.

Picture1: Comparison between Ford EcoSport and its closest rival Renault Duster 3 Another factor that affects the industry is Industry Rivalry or Barriers to Entry. Ford is an already established brand in the automobile industry. With decades of experience therefore while launching the EcoSport it will not have barriers such as a startup company with licensing but other effective barriers such as; The increasing oil prices, Demand in the market, The already existing brands, Government policies in terms of emissions and other specifications and the cost of manufacturing the product.

The last two factors identified in the five factor model are Bargaining Power of Buyers and suppliers, Bargaining power of the supplier indicates how strong is the position of a seller and bargaining power of buyers means, how much control the buyers have to drive down your products price, Can they work together in ordering large volumes. How much your supplier has control over increasing the Price of supplies. In the relationship between the automotive industry and its supplier, the power lies mostly in the hands of the industry manufacturer. The giants such as ford are able to dictate their terms to their suppliers. About 70% of the components of ford EcoSport are made in India itself. In the relationship between the company and the buyers, the later has an upper hand as the market is very competitive and there are a lot of choices available as mentioned above. But then there is a huge market to tap and the SUV market has just started to see growth and the people are patient enough to wait for a order to delivery period of almost 6 to 9 months2.

Ford EcoSport starting variant: Ford EcoSport 1.5L TiVCT Petrol Ambiente at Rs. 5.69 lakhs. http://www.zigwheels.com/newcars/Ford/EcoSport
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The 1.5-litre TDCI diesel variants of the EcoSport have a waiting period ranging from 1 month to 9 months, http://www.motorbeam.com/cars/ford-ecosport/ford-ecosport-waiting-period extends-up-to-9-months/#ID6VuqhWRQlzJgVf.99
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S. Ronendra Singh, An SUV under Rs.6lakh? Enter Fords EcoSport. June26th,13.http://www.thehindubusinessline.com/companies/an-suv-under-rs-6-lakh-enter-fords ecosport/article4852758.ece

Exhibit 1 Porters five forces model The five forces model of analysis was developed by Michael Porter1 to analyze the competitive environment in which a product or company works. It is simple yet powerful tool for understanding where power lies in a business situation, it helps you understand both the strength of your current competitive position and the strength of a position you're considering moving into.

Figure1: The Five Forces Model 1. Threat of substitute products means how easily your customers can switch to your competitors product. Threat of substitutes is high when: There are many substitute products available Customer can easily find the product or service that youre offering at the same or less price Quality of the competitors product is better Substitute product is by a company earning high profits so can reduce prices to the lowest level.

2. A new entry of a competitor into your market also weakens your power. Threat of new entry depends upon entry and exit barriers. Threat of new entry is high when: Capital requirements to start the business are less Few economies of scale are in place

1 Michael Eugene Porter (born May 23, 1947), is the Bishop William Lawrence University Professor at Harvard Business School.

Customers can easily switch (low switching cost) Your key technology is not hard to acquire or isnt protected well Your product is not differentiated

3. Industry Rivalry means the intensity of competition among the existing competitors in the market. Intensity of rivalry depends on the number of competitors and their capabilities. Industry rivalry is high when: There are number of small or equal competitors and less when theres a clear market leader. Customers have low switching costs Industry is growing Exit barriers are high and rivals stay and compete Fixed cost are high resulting huge production and reduction in prices

These situations make the reasons for advertising wars, price wars, modifications, ultimately costs increase and it is difficult to compete. 4. Bargaining Power of supplier means how strong is the position of a seller. How much your supplier has control over increasing the Price of supplies. Suppliers are more powerful when: Suppliers are concentrated and well organized a few substitutes available to supplies Their product is most effective or unique Switching cost, from one suppliers to another, is high You are not an important customer to Supplier

5. Bargaining Power of Buyers means, how much control the buyers have to drive down your products price, Can they work together in ordering large volumes. Buyers have more bargaining power when: Few buyers chasing too many goods Buyer purchases in bulk quantities Product is not differentiated Buyers cost of switching to a competitors product is low Shopping cost is low Buyers are price sensitive Credible Threat of integration