Nissan Motors is a Japan based multinational automobile company and manufacturers. It’s headquartered in Yokohama. The company is globally recognized and sells its products under the brand names of Nissan, Datsun, and Infiniti, along with the in-house performance products called as Nismo. It was established in 1933, and now ranked among the top auto makers across the world. It offers the broad range of models like SUVs, Sports car, and Sentra cars (Nissan, 2019).
As being present in the top automakers of the world, it is necessary for Nissan to understand, and analyze the external and internal factors that influence the company’s profitability and brand image. Porter five forces can be the best model for this objective, as it describes the industrial market and helps in setting approaches appropriately. Here is the detailed porter five forces analysis of Nissan motors;
Bargaining Power of Buyers
Bargaining power of the buyers determine the control of consumers in the prices. The customers of Nissan have relatively low buying power, because of the high cost of the products. Besides this, the consumers are fragmented across the globe as new cars are sold by dealers. Moreover, bargaining power of the consumers get low with the more differentiated products, and Nissan is successful enough in differentiating its automobiles in terms of features and specifications. This helps Nissan in maintaining the profitability and so the brand image. It does not have major threats from consumers as it knows the marketplace of the product (Shetu, 2015).
Bargaining Power of Suppliers
The automobiles are the complex products to manufacture with detailed specifications and require huge number of accessory and components. Nissan requires qualitative components from its trusted suppliers as per its quality control, and thus, this increases the supplier’s bargaining power. There are cases where Nissan is earning high profit, and so the suppliers increase the costs of the raw materials, to earn some share of profits. Suppliers also increases the prices in case of immediate delivery required by Nissan. It is necessary for Nissan to maintain good relationship with suppliers, and continuously search for new suppliers to avoid the shortages and costs increments (UK Essay, 2018).
Threats of New Entrants
The threats of the new entrants depend on the industrial barriers. This is the company’s strategy to protect itself from competitors from entering in the market. Nissan is facing low threats from the new entrants, because it has set high standards from its product portfolio, that makes it difficult for new entrants to compete. Moreover, the automobile industry requires huge capitalization for start-up, and economies of scales. It is difficult for them to source and find new suppliers that will provide the raw materials in affordable prices. Moreover, the switching cost of consumers is high, which makes it difficult to grab the consumer base (Saeed, 2015).
Threats from the Substitute Products
The threats from the substitute products is medium to high, because of the high cost of automobiles, and low costs of public transport fares, like bus, trains and tube. Many people prefer public transport to avoid the traffic congestion, and for environment protection. Nissan is also facing threats of the substitutes from Hyundai, or Toyota, etc. however, there are Nissan loyalists, who prefer the brand’s products at relatively high prices than switching the brand. It is necessary for the Nissan to innovate the automobiles and provide new features to attract the consumer base (Shetu, 2015).
Rivalry of Existing Players
The global automobile manufacturers are facing intense competition, and Nissan is one of them. It is facing competition from local and international competitors like Toyota, Honda, General Motors, Daimler Chrysler. Still Nissan is known to be one of the most profitable automobile company across the world. To decrease the market competition, Nissan and Renault did strategic alliance which benefits both. Nissan is trying hard to increase the market share by competing with Toyota. It is necessary for Nissan to manufacture alternatives of Toyota products in less prices then Toyota to grab the market position (UK essays, 2018).
References
Nissan, 2019. Our company. [Online], Available at: https://www.nissan-global.com/EN/COMPANY/, [Accessed on: 20th November, 2019].
Saeed, S. 2015. Nissan full report. [Online], Available at: https://www.slideshare.net/salmands/nissan-full-report, [Accessed on: 20th November, 2019].
Shetu, 2015. Case analysis f Nissan Motor Co. [Online], Available at: https://www.academia.edu/13657484/Case_analysis_of_Nissan_Motor_Co, [Accessed on: 20th November, 2019].
UK essays, 2018. Porter’s competitive forces: Nissan. [Online], Available at: https://www.ukessays.com/essays/marketing/porters-competitive-forces-model-marketing-essay.php, [Accessed on: 20th November, 2019].