Impact of Hybrid and Electric Cars on Automobile Industry

Running head: STRATEGIC MANAGEMENT
Strategic Management
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Executive Summary:
The report gives an overview of the impact of hybrid and electric cars in the world automobile
industry. The report therefore, undertakes a porter’s five forces analysis along focusing primarily
on the electric vehicle market. There report also discusses about the strategic options that
premium companies like the Mercedes and BMW adopts in maintaining their competitive stance
with respect to the electric vehicle market.

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Table of Contents
Introduction:....................................................................................................................................3
Impact of Production of Hybrid and Electric Car on the World’s Automobile Industry using
Porter’s Five Forces.........................................................................................................................4
Strategic Options Adopted by Automobile Manufacturers for Defending their Competitive
Stance...............................................................................................................................................8
Mercedes..........................................................................................................................................8
BMW...............................................................................................................................................8
Conclusion:......................................................................................................................................9
References:....................................................................................................................................10

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Introduction:
The report is a discussion on strategic management based on a case study provided. The
case study is based on the impact of hybrid and electric car on the world’s automobile industry.
A hybrid vehicle makes use of two or distinct power types such as internal combustion engine
for driving the electric generator that helps on powering electric motor. An electric car on the
other hand is an automobile propelled by electric motors and uses the energy stored in the
rechargeable batteries. The report deals with a discussion on impact of production of electric and
hybrid cars on the automobile industry through porter’s five forces. There is also discussion on
the strategic options adopted by premium automobile manufacturers like Mercedes and BMW
for defending their competitive stance.
Impact of Production of Hybrid and Electric Car on the World’s Automobile Industry
using Porter’s Five Forces
Bargaining Power of the Customers
The bargaining power of the customers is determined by the presence of a large of
competitors (Fabbri and Klapper 2016). The purchase of a car is considered costly and
consumers at the same time are quality conscious so they show a greater inclination towards the
Western brands. There is a thorough search undertaken by the consumers before they actually
they make a purchase. Therefore, a higher criterion for the purchase lowers the bargaining power
of the industry because of limited quality offerings. The history in relation to the battery quality
of the Chinese electric car shows the fact that buyers prefer brands that ensures best battery range
and technology. Producers such as BMW and Tesla should therefore build a charger network that
will help them in the expansion of the car range (Porter and Heppelmann 2014). This will not