International strategy operation Coursework Example | Topics and Well Written Essays - 1250 words

International strategy operation - Coursework Example In this context, the unattractiveness of the ‘mass market’ segment of the auto industry would be based on the following fact: the profits generated by the firms operating in the specific field are low. The above condition would be checked using Porter’s Five Forces model. Through this model the competitive environment of an organization can be evaluated. In this way, a strategy can be identified so that the organization involved is better positioned in its market2. The above approach has been characterized as ‘outside-in’ approach emphasizing primarily on each firm’s external environment and not on the organizational resources3. In the context of the Five Forces model, the ‘mass market’ segment of the auto industry would have to face the following forces: a) new entrants4; competition in the automotive industry is extremely high. Even if the number of new entrants is kept at low levels, the market share of the industry’s lea ding firms is so high that it is difficult for medium firms of the particular industry to standardize their market position. Even the industry’s major competitors often face difficulties in keeping their competitiveness high; b) bargaining power of customers5; customers can choose among a high range of cars of the particular category. ... ?s major competitors there are firms operating locally increasing the challenges for the industry’s multinationals8; e) substitute products9; in the context of the ‘mass market’ it is quite easy for substitute products to appear at the level that the technology used in cars of the ‘mass market’ can be easily adopted by the industry’s small manufacturers. According to the issues discussed above, the chances for profits in the ‘mass market’ segment of the automotive industry are limited, a fact that harms the attractiveness of the industry’s specific segment. 2. Explain why profitability is generally higher at the luxury and ultra-luxury end of the auto industry. In order to understand why profitability is higher at the luxury and ultra-luxury end of the auto industry, it would be necessary to evaluate the characteristics of the above segment using an appropriate strategic tool, such as the PESTEL analysis. The above tool help s to analyze the macro-environment of an industry, or of an industry’s segment, so that the current status and the prospects of the particular industry are effectively evaluated. The PESTEL analysis focuses on six elements of a firm’s macro-environment, as these elements are able to influence the performance of organizations operating in the industry involved: Political, Economic, Social, Technological, Environmental and Legal. The PESTEL analysis for the luxury and ultra luxury end of the auto industry would be developed as follows: a) Political: political conditions worldwide are not stable. Strong political conflicts are developed in most countries in the international community. In such political environment it would be quite difficult for an industry’s profits to be standardized. The luxury and the ultra luxury end of