Porter’s Five Forces for Hyundai in Korea

1. Barriers to Entry: HIGH

Multiple barriers to entry exist, which makes it difficult for any new automobile manufacturer to come into the industry and have success. One of the greatest barriers to entry in the automobile industry is the extremely high amount of capital that is required to purchase physical manufacturing plants, raw materials, as well as to hire and train employees. Manufacturing companies must also have the ability to mass-produce so that they can make cars affordable to customers.

2. Power of Suppliers: LOW

There are so many parts that are used to produce an automobile, that it takes many suppliers to accomplish this. When there are many suppliers in an industry, they do not have much power due to that industry manufactures can easily switch to another supplier if it is necessary.

3. Power of Consumers: LOW

With the huge tax that the Korean government put on foreign cars, people in Korea will likely get  a Korean brand car. Because there are only three major car company, the consumers have no power over the Hyundai’s market.

4. Availability of Substitutes: MEDIUM

As public transportation is very developed in Korea, it is much more efficient and cost effective to not buy a car. As a result more consumers are opting to take public transit. Also, in Korea, because there are lots of cars with limited land, there are usually a lot of traffic jam so taking subways and trains are more optimal.

5. Rivalry: LOW

The huge tax on the foreign brand cars implemented by the government gets rid of lot of competition in Korea. Because Hyundai is the biggest Korean car company, there aren’t many rivals.