Analysing Strategic Issues in Geely Automobile – Industry Structures and Dynamics Essay
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Geely Automobile Holdings Ltd. , formerly known as Guorun Holdings Ltd. , embarked on a major restructuring in 2003. By establishing two joint-venture associated companies in Ningbo and Shanghai with Zhejiang Geely Holding Group Ltd. , a major privately-owned auto manufacturer in China, the company had successfully entered into China’s booming sedan industry.
In the same year, the company set up an auto parts subsidiary in Taizhou of the Zhejiang province, further consolidating the foundation of the company’s investments in China’s automobile industry, thus successfully transforming the company’s key businesses into automobile manufacturing and the related areas.
In May 2004, the company’s two associated companies agreed to acquire other auto-related assets under Zhejiang Geely Holding.
After the acquisitions, the automobile research and development organizations under Zhejiang Geely Holding, all operating production plants, car models, and respective engines and gearboxes being launched or to be launched would have been included in the two associates formed by the company. This restructuring should enable the company to share the same interests and benefits with Zhejiang Geely Holding in their future developments in auto-related businesses.
Analysing strategic issues in Geely Automobile – Industry structures and dynamics (5 forces) Michael E. Porter’s five-forces model assess the nature of competition in an industry, it looks at the strength of five distinct competitive forces, which include the Degree of Rivalry, The Threat of Entry, The Threat of Substitutes, Buyer Power and the Supplier Power.
When these forces are being taken together, they determine long-term profitability and competition. Porter’s work has had a greater influence on business strategy than any other theory in the last half of the twentieth century. (Porter,1998) Out of them, the rivalry between existing sellers in the market, the potential threat of new sellers and substitute products entering and becoming available in the market are chosen to facilitate a greater discuss on.