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Jennifer Moore BUS 225 Milestone One Template March 19, 2022

Executive Summary

Description of Problem

The dynamics in the business field require that firms be on constant look at the ways to expand their operations and generate more profits. Therefore, the Dynamics in the automotive industry might face an organization out if it does not look for opportunities. Therefore, as a manager of a firm in this industry, I have analyzed the existing opportunities and now the firm is looking to expand its operations and diversify into another industry. Our operations of engine manufacture have open additional opportunities to expand, and among the industries that we have analyzed as firm, we have reached a conclusion that the best industry to venture into is the generators manufacturing industry. Generators are essential components in the electrical industry and the in the United States the component is used for residential as well as commercial purposes. Before the company ventures into the industry, it important to conduct some analysis in both automotive manufacturing industry and the potential generator manufacturing industry and compare and contrast statistics, qualitative and quantitative, o help us get insights on how well the company can venture into the industry. The data that will be used will be achieved from each industry's financial reports and studies. We will begin the process by reviewing the automotive industry.

Description of the Current U.S. Automotive Industry

The in-dept research of the U.S automotive industry shows insightful information about performing the industry and the general expectation. The IBISWorld report shows quantitative data on the industry’s financial performance. According to the reports statistics, the automotive industry reported a net worth of $10.2 million in the last financial year report as stated in the chart (Egan, 2020). The fuel industry showed different market shares for different fuels as a percentage in 2019. Gasoline (93%), diesel (2.8%), electric (1.8%) and plug-in hybrid (0,5%). We can compare this data to the revenue of 2020 (Manzi, 2019).

Current Automotive Market Trends

The trends in the industry are crucial for gaining insights that can help understand the entire industry and in making informed decision. The automotive industry has this trends that can aid us in making informed decision regarding our diversification. The automotive industry is composed of vehicle manufacturing which include truck, cars and motorcycle as shown I the provide pie chart (Automotive Manufacturing, 2020). Fuel efficiency is another key trend that has been observed in the recent past as the population shift towards fuel efficiency; “Engine efficiency is a key topic for innovation in the automotive sector, driven by changing consumer preferences and new regulatory standards” (Egan, 2020). The trends are crucial to the company because we primarily deal with engine manufacture; and thus, the increase in demand for electric vehicle might decrease the fuel engine demand.

Description of the New Industry

The generator industry in the United states is the most important industry which other industries depend entirely on; therefore, it appeals to us as the engine manufacturing company. The generator industry has three major segments depending on the required power: the low, medium, and high-power segments.  The critical analysis of the markets of these three segments shows that the medium and to high-power diesel market is expected to grow. “The lack of reliable grid infrastructure and the need for backup power solutions are likely to drive the diesel market in the United States” (United States,n.d.). The increase in demand in the past is because of the demand for alternative sources of energy as the current source, the grid, faces rampant outages because of the natural disasters. “According to the Edison Electric Institute, weather events cause over 70% of power outages in the United States. Natural disasters, including hurricanes, windstorms, floods, tsunamis, earthquakes, destroy critical energy infrastructure and result in prolonged power outages” (Gupta, 2018). The energy used in the united states mostly comes from fossil fuel and the smallest portion from the renewables sources; therefore, the risk is currently minimal in the industry. The current fuel industry is worth $1.22 billion, and it is expected to grow.

Current Market Trends in the New Industry

The generator industry has few trends that will allow us to analyze the volatility of the market. We noted earlier that I expect the demand for diesel and commercial generators to increase in the future. The demand will specifically come from the household sectors, and we expected the projected increase in the commercial and industrial growth to increase the demand for the power (“US Generator,” n.d.). The low power generators have seen the most popularity and we expect all segments to aid in the future success and growth (“Diesel Generator,” 2020).

Appendix A

Explanation from Porter’s Five Forces Analysis of the New Industry

It is important to understand market performance of the new industry before venturing in it. The port’s Five Forces Analysis can lead to understand different important aspects of the new industry. First, we can assess the threats that new industry entrants experience. For instance, the existing companies in the industry which have existing customers loyal to their brand can make the new firms experience challenges of marketing and selling their products. The existing companies have cost saving benefits of economies of scale. The suppliers impact the industry because they can change price because of the brand uniqueness and the advantage that generators can supply power during hard grid power shortage. The substitution threats in the generator industry are very low since there are no power alternatives. There are many brands making up the market share thus now such one brand that can dominate the market.

Appendix B Summary of Findings from Porter’s Five Forces Analysis Comparing Both Industries

It is important to understand market performance of the new industry before venturing in it. The port’s Five Forces Analysis can lead to understand different important aspects of the new industry. First, we can assess the threats that new industry entrants experience. For instance, the existing companies in the industry which have existing customers loyal to their brand can make the new firms experience challenges of marketing and selling their products. The existing companies have cost saving benefits of economies of scale. The suppliers impact the industry because they can change price because of the brand uniqueness and the advantage that generators can supply power during hard grid power shortage. The substitution threats in the generator industry are very low since there is no power alternatives. There are many brands making up the market share thus now such one brand that can dominate the market.

Appendix A

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