Read Scenarios and answer the question. U.S. Automotive Industry The Big Three –

Question

Read Scenarios and answer the question.

U.S. Automotive Industry
    The Big Three – GM, Ford, and Chrysler – ruled the U.S. car market for most of the 20th century. Highly profitable GM had over half of the U.S. market to itself, but Ford and Chrysler both did well too. Then, in the 1960s and 1970s, foreign carmakers entered the U.S. market, at first mainly by importing vehicles from overseas plants. Foreign makers included the German brands Volkswagen (also owner of the Porsche and Audi brands), Daimler, and BMW, and the Japanese brands Toyota, Honda, and Nissan. By the 1980s, these foreign entrants had intensified competition and threated the Big Three’s market share, such that the U.S. Congress passed significant import restrictions. Not to be stopped, the new players responded by building U.S. plants to comply with the new rules. More recently, Korean carmakers Hyundai and Kia have begun making and selling cars in the United States.
    Otherwise, the worldwide car manufacturing industry has seen few new entrants in general. In fact, no new major car manufacturers have emerged in the past couple of decades simply because few industrial products, save for jet airplanes and nuclear power plants, are as complex to build as traditional cars powered by internal combustion engines. Large-scale production is necessary for car manufacturers to be cost-competitive. In addition, the price for crude oil declined steeply from over $110 per barrel in the summer of 2014 to about $40 by spring 2015. With it, prices for a gallon of regular gas in the United States fell from over $4 in the summer of 2008 to less than $2 by 2015.
    Taking a different approach, serial entrepreneur Elon Musk, who creates and runs new ventures to address not only economic but also social and environmental challenges, has entered this highly-competitive industry with his all-electric car company, Tesla. Compared to complex gasoline engines, electric power trains use relatively simple motors and gearboxes with few parts. The Model S received an outstanding market reception. It was awarded not only the 2013 Motor Trend Car of the Year, but also received the highest score of any car ever tested by Consumer Reports (99/100). Tesla manufactures the Model S in the Fremont, California, factory that it purchased from Toyota. Tesla has committed to building a $5 billion, 980-acre facility near Reno, Nevada, to produce its own lithium-ion batteries for its automobile assembly plant in Fremont.

QUESTION 1

Entry into the U.S. auto market to compete with GM, Ford, and Chrysler is an example of which threat in the external environment?

Political

Legal

Global

Environmental

1 points   

QUESTION 2

The restrictions that led to the relocation of foreign firms in the United States is an example of which part of the external environment?

Global

Economic

Technology

Political

1 points   

QUESTION 3

The complexity of producing an internal combustion engine and the large scale production necessary for profitability reduces which of Porter’s Five Forces?

Threat of Rivalry

Power of Buyers

Threat of Substitutes

Threat of New Entrants

1 points   

QUESTION 4

As an economic influence on the external environment, what will be the impact of lower gas prices for automobile manufacturers?

Increased demand for electric cars

Decreased demand for automobiles due to environmental reasons

Increase demand for smaller foreign cars

Increase demand for larger Sport Utility Vehicles and trucks

1 points   

QUESTION 5

Tesla building its own battery production facility in Reno reduces which of Porter’s Five Forces the most?

Power of Buyers

Threat of Substitutes

Power of Suppliers

Threat of New Entrants

Political

Legal

Global

Environmental

Explanation / Answer

Q1:-Entry into the U.S. auto market to compete with GM, Ford, and Chrysler is an example of which threat in the external environment.

Ans:-Political

Q2:-The restrictions that led to the relocation of foreign firms in the United States is an example of which part of the external environment

Political

Q3:-Ans : Threat of substittutes

Q4:- Ans:-Increase demand for larger Sport utility vehicles and trucks.

Electric cars are run using

Q5:-Power of Suppliers

By doing vertical integration by producing their own battery it will reduces threat of power of suppliers and their bargaining power.

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.