The automobile industry is a manufacturing industry in the production of cars and car parts. The SIC code for the Brazil automobile industry is 5012 and the corresponding NAICS code is 421110 (Humprey, 2017) .This analysis discusses the five factors that shape strategy.
New entrants in the automotive industry face threats that make them disadvantaged. Economies of sales, switching coastal, government policy and capital requirements are some of the barriers that can stop new entrants to do well industry. The threat to new entrants in Brazil is medium.
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The bargaining power of suppliers will affect the success of firms in the industry. The quality and price of the products produced by competing firm give the supplier power to bargain. When a firm compromises its price and sale at a lower cost than the production cost then it will incur losses. This factor is medium in the Brazilian automobile industry.
The bargaining power of the buyers in Brazil is low and will greatly affect the automobile industry (Humprey, 2017) . The buyer will always want to buy goods at the lowest price possible and this will increase competition among manufacturing companies. As much as the firm may reduce its prices to attracts more customers and eliminate competition, it should not sell lower than the invested capital. The industry has control of pricing.
The threat of substitute products is medium in Brazil automobile industry. Railway and airplane means of transport pose a major substitute problem to the automobile industry in Brazil (Paylinek, 2017) . Most of the Brazil populace can't afford air transportation and the rail network is not well advance giving automobile an upper hand.
The current rivalry of competition in Brazil's automobile industry is high. There are very many firms offering similar products at different prices and quality.
In summary, the automobile industry is an attractive industry considering the level of the five factors.
References
Humprey. (2017). Capital control and worker's struggle in the Brazilian. Rio: Springer Publisher.
Paylinek. (2017). The state and development of Automotive Industry. Rio: Adventure Press Works.
