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BSS044-3 International Business Management

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  • Course Code: BSS044-3
  • University: University Of Bedfordshire
  • Country: United Kingdom

Question:

Discuss about the Porter five forces on Nissan Motor UK.

 

Answer:

Introduction

Nissan Motors is a leading automobile company headquartered in Japan. The company was founded in 1933 under the Nissan Group. Since 1999, the brand is a part of the Renault-Nissan-Mitsubishi alliance. Nissan is the world’s largest manufacturer of electric vehicles and the sixth largest automaker in the world (Bhatia, 2016). Since, the inception the brand has delivered quality products and set the right positioning in the minds of its consumers. This report highlights upon the five forces of porter that are effectively working with the brand in UK.

Porter’s five force model

Porter’s five force model is a strategic tool that allows firms to understand the intricacies of the industry in which they function (David, 2011). The model aims at understanding various forces that work upon a brand in its existence. Porter’s five force model for Nissan Motors in UK is as below:

Bargaining power of suppliers

There are various suppliers that every organization needs to coordinate with. Any brand in the automobile industry procures material from various suppliers. It would be impossible for a brand to make a final product without the products offered by these suppliers. This gives the suppliers of the brand certain power. Bargaining power of suppliers plays a critical role in strategic management of any brand (Hill, Jones & Schilling, 2014).

 A car is a complicated product and in order to ensure the quality of the product, it is imperative that all the parts of the car are bought from effective quality suppliers. Nissan has a large number of suppliers who efficiently coordinate in building a fine quality product. Nissan suppliers have a Moderate power as the brand name of the firm is strong enough to attract new suppliers. Associating with such a strong brand adds to the goodwill and market positioning of the suppliers.

Bargaining power of buyer’s

Every brand has a large number of buyers. This is because every business runs on the simple concept of demand and supply. If the demand is too high, the prices of a product go up. The increasing number of players in the industry has also enhanced the level of competition. This provides the buyers of the product with a wide variety of option to select from. This gives them the power to manipulate prices of the product (Haucap et. al., 2013).

 Bargaining power of buyers is crucial for any firm to analyze in order to be able to understand the industry competition. Buyers of Nissan products have low bargaining power. They need to purchase the car at the offered price. The bargaining power of buyer’s often depends upon the brand name of the organization. The strong brand name of Nissan allows buyers less privilege to bargain their price.

 


Threat of new entrants

Threat of new entrants for any organization tries to analyze how easy or difficult is it for an entirely new business to exist and gain market share in the industry. Threat of new entrants in the automobile industry is low. This is because of the high cost and extensive regulations that are required in order to set up an automobile business. Nissan is an already established brand and well known throughout the globe. It would take a long time for a new venture to set up the cot, attract customers and build the same goodwill in the United Kingdom market. The laws and regulations that a firm needs to abide by in order to open a new business in the UK are also stringent. This makes it even more difficult for entrepreneurs to enter the UK market. The stringent laws coupled with the high cost of automobile manufacturing set up create a bumpy road for entrepreneurs in UK. Therefore as a firm, Nissan does not particularly face the threat of new entrants.

Threat of substitution

Threat of substitution for any organization refers to the threat posed by similar products that can be used in place of the product offered by the brand (Porter & Heppelmann, 2014). In the era of increasing technology and globalization, a four wheeler vehicle is no more a desire. A car is the basic need of people. Even though the changing trends and enhanced technology has introduced solar and electricity run vehicles, but there has not yet been a substitute for a car.

Moreover, the world class research and development department of Nissan has always made it possible for the brand to embrace the new technology. Today, Nissan is the largest manufacturers of the electric vehicles in the world. Therefore it is safe to say that the threat of substitution faced by Nissan in the United Kingdom is low.

Competitive rivalry

The extent of competition faced by players in the automobile industry is very high. There are various players like Toyota, Tata, Maruti, Honda, Mitsubishi, Suzuki, Volkswagen, Ford and various other brands including high end brands like Mercedes, Volvo, Audi, Ferrari and BMW. In December 2017, Nissan motors owned a market share of 6.09% in the UK automobile market (Statista, 2017). Market shares of leading automobile brands in 2017 are as given below (Auto Car UK, 2018):

Brand

2016

2017

Nissan

5.66%

6.09%

Audi

6.58%

6.88%

Bentley

0.07%

0.07%

BMW

6.78%

6.7%

FIAT

2.40%

1.96%

Ford

11.83%

11.38%

Hyundai

3.43%

3.70%

Honda

2.19%

2.15%

Jaguar

1.29%

1.40%

Jeep

0.52%

0.26%

Mercedes-Benz

6.31%

7.04%

Mitsubishi

0.68%

0.62%

Porsche

0.49%

0.54%

Renault

3.16%

2.76%

Toyota

3.59%

4.05%

Volkswagen

7.69%

8.09%

Volvo

1.73%

1.80%

 
Every player of the industry offers a sundry variety of cars ranging from high end vehicles to low end vehicles. All the brands have lucrative offerings in hatchbacks, sedans as well as SUVs. Most leading brands are offering electric vehicles as well as fuel run vehicles. This makes it imperative for brands to gain a competitive advantage, stay up to date with technology and consistently revive its positioning in order to sustain the market (Barney, 2014).

Nissan Motors is a leading name in the automobile industry. Since its inception, the brand has been well known for delivering quality automobiles to all its customers across the globe. Effective marketing strategies adopted by the brand, high quality products and efficient after-sale service assists in setting the right positioning for the brand in the minds of its customers.

 

References

AutoCar UK, 2018. ‘The winners and losers of 2017 UK Car market’. Available at https://www.autocar.co.uk/car-news/industry/winners-and-losers-2017s-uk-car-market. Accessed on 19 April, 2018.

Barney, J.B., 2014. Gaining and sustaining competitive advantage. Pearson higher ed. United States.

Bhatia, J., 2016. Porter's Five Forces Industry Analysis of Indian Passenger Car Industry. PACIFIC BUSINESS REVIEW INTERNATIONAL, 8(7), pp.113-123.

David, F.R., 2011. Strategic management: Concepts and cases. Pearson/Prentice Hall. United States.

Haucap, J., Heimeshoff, U., Klein, G.J., Rickert, D. and Wey, C., 2013. Bargaining Power in Manufacturer-Retailer Relationships (No. 107). DICE Discussion Paper.

Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.

Porter, M.E. and Heppelmann, J.E., 2014. How smart, connected products are transforming competition. Harvard Business Review, 92(11), pp.64-88.

Statista. 2017. ‘Nissan car market share in the United Kingdom’. Available at https://www.statista.com/statistics/300454/nissan-car-market-share-in-the-united-kingdom/. Accessed on 19 April, 2018.

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