<p style="text-align: justify;">Hyundai Mobis is a public South Korean car parts company. They are founded as Hyundai Precision &; Industries Corporation in 1977 (Mobis, 2021). It is one of the world&#8217;s largest parts-affiliated suppliers. The company produced rail cars and military supplies, but it was spun off to specialize in auto parts. The Hyundai Mobis&#8217; is the major part supplier to Hyundai Motor, Kia Motors, and Genesis Motors. The company operates through the following business divisions: Module, Core Automotive Parts, Future Automobile Industry, After-Sales Parts, Overseas Original Equipment Manufacturer, and Purchasing. The company more than 32,000 employees’ people all over the world (Mobis, 2021). Porter&#8217;s five forces model is a helpful tool to identify threats and opportunities faced by Hyundai Mobis in the automotive industry.</p>
<h2 style="text-align: justify;">Competitive Rivalry in The Market</h2>
<p style="text-align: justify;">The automotive parts market is concentrated, and the industry is competitive. Competitors keep on innovating better products for automotive manufacturers. Hyundai Mobis is ranked at number 7th in the list of OEM Companies based on revenue in 2018 (Hunkar, 2020). All of these companies have a presence all over the world. Its main competitor is Aisin Seiki, Lear Corp., Continental, and Magna International.</p>
<p style="text-align: justify;">Continental and Magna posted annual revenue of €37.3 B (Statista, 2021) and $33 B (Statista, 2021) in the fiscal year of 2020. Hyundai Mobis posted annual revenue of $32.6 B with a profit of $1.9 B in the financial year 2020; it is listed at 385th number in Fortune Global 500 (Fortune, 2020). There is intense competition in the market to capture maximum business share.</p>
<h2 style="text-align: justify;">Threat Of Substitutes</h2>
<p style="text-align: justify;">The automotive part industry has significant importance in overall automotive industry. The companies provide parts from chassis to simple Bluetooth connecting devices. Technology is the driving force behind the latest revolution all over the industries. The dawn of the 21st century brings the IT revolution. The world is moving toward more sustainable means of commuting; electric vehicles are a key to the future. According to Deloitte (2019), Automotive parts such as Electric drivetrain, electronic assemblies, battery and fuel cells, and ADAS and sensors will see unprecedented growth in demand.</p>
<p style="text-align: justify;">There is a decrease in the order of conventional parts because of the industry moving towards electric vehicles. The company is moving with the need of time. It is incorporating AI technology to improve product quality and efficiency (Newsworld, 2019). The threat of substitution is at a low level against the company.</p>
<h2 style="text-align: justify;">The Threat of New Entrants</h2>
<p style="text-align: justify;">The possibility of new entrants had a significant part in developing and changing the competitive dynamics of any industry. Some significant barriers to entry into any industry are the scale of the economy&#8217;s product differentiations, high capital cost, distribution channel, and legal and government regulatory barriers (Luenendonk, 2019). The threat of entry into the automotive parts industry is low. It requires high initial capital and innovation to disrupt the market leader. Besides this newcomer must have some link with automotive maker which seems too difficult.</p>
<p style="text-align: justify;">All the automotive makers depend on their OEM because of the product&#8217;s quality of product and cost. Hyundai Mobis&#8217; significant chunk of sales is its own associate companies Kia Motors, Hyundai Motor, and Genesis Motors. Therefore, the newcomer must develop its link with the manufacturer. Considering the facts mentioned earlier, the threat of new entrants remains low.</p>
<h2 style="text-align: justify;">Bargaining Power of Buyers</h2>
<p style="text-align: justify;">Buyers can significantly impact a company&#8217;s product and selling decisions. The buyers&#8217; buying capacity, availability of the alternative product, and quality are the deciding factors in negotiating better deals. Strong buyers can be the reason for the price war and competition within the industry. The most substantial power buyers can exert lower prices, affecting the profit potential (Luenendonk, 2019).</p>
<p style="text-align: justify;">The buyers of the automotive parts are individuals and companies. Individual buyers require the products after-sale maintenance. This group is diversified and holds no power. Automotive makers have long-term contracts with part makers, and parts makers are usually future integrated. The higher switching cost due to the quality of products and availability of alternative products makes it difficult for buyers. In this case, the buyers&#8217; bargaining power is weak.</p>
<h2 style="text-align: justify;">Bargaining Power of Suppliers</h2>
<p style="text-align: justify;">The suppliers in the automotive parts industry are the raw material suppliers, equipment suppliers, and labor suppliers. The suppliers are one major part of their value chain that needs focus in this industry. Without suppliers, the company has nothing to offer, whether it is a product or service. According to Porter (1979), in industries where the quality of the products is very much affected by the suppliers’ product, suppliers are usually substantial.</p>
<p style="text-align: justify;">However, the suppliers, in this case, have less power. Firstly, there is a limited number of brands, and their brands purchasing capacity outplays suppliers. Secondly, there isn&#8217;t any threat of forwarding integration at all. Thirdly, there is several suppliers available for raw materials. In this way, the bargaining power of suppliers is considerably low.</p>
<h2 style="text-align: left;">References</h2>
<p style="text-align: left;">Deloitte. (2019) 2019 Global Automotive Supplier Study. Available at: https://www2.deloitte.com/us/en/pages/manufacturing/articles/global-automotive-supplier-study.html<br />
Fortune. (2020) Hyundai Mobis. Available at: https://fortune.com/company/hyundai-mobis/global500/<br />
Hunkar. D. (2020) The Top 100 Global Auto Parts Suppliers: Chart. Available at: https://topforeignstocks.com/2020/03/09/the-top-100-global-auto-parts-suppliers-chart/<br />
Luenendonk. M. (2019). Bargaining Power Of Buyers &#8211; Porter’s Five Forces Model. Available at: https://www.cleverism.com/bargaining-power-of-buyers-porters-five-forces-model/<br />
Luenendonk. M. (2019). Threat Of New Entrants &#8211; Porter’s Five Forces Model. Available at: https://www.cleverism.com/threat-of-new-entrants-porters-five-forces-model/<br />
Mobis. (2021) e-History Museum. Available at: https://en.mobis.co.kr/ne-histories/solidarity/list.do<br />
Mobis. (2021) Overview Available at: https://en.mobis.co.kr/intro/contentsid/1983/index.do#<br />
Newsworld. (2019) Hyundai Mobis Makes Good Use of AI Technology. Available at: http://newsworld.co.kr/detail.htm?no=5536<br />
Porter., E. M (1979). How Competitive Forces Shape Strategy. Available at: https://hbr.org/1979/03/how-competitive-forces-shape-strategy<br />
Statista. (2021) Continental AG&#8217;s revenue from FY 1999 to FY 2020. Available at: https://www.statista.com/statistics/264242/revenue-of-continental-ag-since-1999/<br />
Statista. (2021) Global sales of Magna International Inc. from FY 2011 to FY 2020. Available at: https://www.statista.com/statistics/199726/global-sales-of-magna-international-inc-since-2001/</p>