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Toyota

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Entry Barriers –

New automakers entering the market will experience a high barrier to entry due to large financial resources required. In addition, a major advantage that Toyota possesses is their experience and understanding of how the market works. Toyota has also reached economies of scale through mass-producing, spreading marketing and advertising costs over a large volume of output, and receiving discounts on bulk purchases of raw materials.

Although the barriers to new companies are significant, established companies like Toyota entered the US market in the early 1980’s quite easily. This was because GM, Ford, and Chrysler failed to offer quality vehicles in the lower price markets. Also, there isn’t much brand loyalty in the automotive industry. Customer switching costs would also be considered low.

Bargaining Power of Buyers –

The buyers in this case would be Toyota customers. Buyer power for their customers would be considered high because they can switch to other companies with low switching costs. Toyota needs to provide a high quality service at a good price in order to reduce the likelihood of this happening.

Toyota is considered a powerful buyer in the automotive industry and generally able to dictate their terms to their suppliers. Toyota purchases in large quantities and can use their purchasing power as leverage to bargain for price reductions.

Although Toyota seems to have a lot of buying power, they can not easily switch to another supplier.

Bargaining Power of Suppliers –

The supplier in this case is Toyota itself. The vehicles that Toyota sells have many substitutes, which give Toyota less power. Consumers have more power due to the fairly standardized nature of the vehicle, and the low switching costs associated with selecting from among competing brands.

The bargaining power of the suppliers is considered

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