Topic > Case Study Entering Automotive Manufacturing

Supplier power is mitigated because various limitations exist. For example, there is a large presence of suppliers in the market, which results from the entry of foreign entities into the market through the forces of globalization. Another obstacle that decreases the bargaining power of suppliers is the lack of differentiation - in most cases - with regards to raw materials. Therefore, the lack of differentiation and the abundance of foreign competitors result in subsequent threats of substitution from automotive manufacturers and high competition among suppliers. However, suppliers gain relative power over automakers if they have differentiated their product, presumably based on the quality and importance of raw materials such as steel in production.