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Using Porter’s Five Forces model on Toyota (Competitors, suppliers, buyers, new entrants, and substitution), analyse the competitive structure of one of its key markets and the reasons it is attractive. Each force to be discussed and assessed as High, Mod

Competitors: High Toyota faces a highly competitive landscape in the automotive industry with significant and well established players such as General Motors, Volkswagen, Ford and Honda, who compete for market share and profits. Furthermore, these competitors have established dealer networks and relationships with customers that Toyota might not have, which also contributes to the high competition. Suppliers: Moderate Toyota has considerable negotiating power over its suppliers, especially because of its global size and scale. However, the auto parts industry is highly fragmented, with many suppliers and small players that Toyota has to compete with for parts. This limits its ability to gain pricing advantages from suppliers and contributes to moderately high supplier power. Buyers: High Toyota faces a highly fragmented buyer landscape, with a large number of customers, ranging from individual buyers to large corporations and fleet owners, which dilutes the ability of the buyers to negotiate lower prices or greater value-added services from Toyota. New Entrants: Low Entering the automotive market is difficult and expensive due to the large investments needed to develop a brand and products as well as the significant capital necessary to set up distribution networks and production lines. This, together with the high competition, makes the automotive industry unattractive for new entrants and thus, this force is considered Low. Substitution: Moderate The automotive industry is a mature sector and as such, substitutes might exist and are easily available. However, the substitutes might not offer the same value and quality as Toyota’s cars, which limits the risks of substitution from an attractiveness point of view. Update (2023-11-21): Competitors: High Toyota has seen increasing competition in its key markets over the past decades. It faces competition from a wide range of major competitors such as Honda, Chevrolet, Ford, Nissan, and Hyundai. These competitors have a strong presence in the global automotive market and are all striving for market share. All of these competitors have global brands and use heavy marketing to reach buyers. Overall, the competition in this market is high. (Roth, 2016) Suppliers: Moderate Toyota sources a wide range of components from suppliers across the world. While it is a competitive market, the major automakers have established relationships with suppliers and have some bargaining power. However, the supplier power is not high enough to be a major point of concern for Toyota. (Roth, 2016) Buyers: High In terms of buyer power, the market is highly competitive. Buyers are able to choose from a wide range of models and prices, giving them considerable leverage when shopping for a car. Toyota has to be constantly innovating its products in order to stay ahead of the competition to ensure that buyers are more attracted to its vehicles. (Roth, 2016) New Entrants: Moderate The automotive industry is a highly competitive market, and as such, it can be difficult for new entrants to gain market share. However, the industry does provide opportunities for new entrants, as the barriers to entry are not excessively high and profits can be made. Due to the high competition in the market, new entrants will have to come up with innovative products and establish a strong brand presence in order to compete. (Roth, 2016) Substitution: Moderate Due to the wide range of cars available on the market, buyers have some options for substituting vehicles. Another factor is the emergence of alternative forms of transportation such as bicycles, electric scooters, and public transportation, which are all viable alternatives to traditional cars. This has forced automakers to innovate and find ways to remain competitive in order to maintain or increase their market share. (Roth, 2016)

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