Business Strategy

 

Porter's Five forces analysis

Rivalry: High

There are numerous dealerships locally that Open Road competes with including: Planet Honda, Ray Catena Mercedes Benz, and Springfield Nissan. The volume of available alternative options for car buyers increases the rivalry forces. Shoppers will have the power to shop for the lowest prices which means Open Road Auto Group will have to compete with earning their business. According to NADA.org, there were 446 new car dealerships just in NJ. 

Threat of New Entrants: Low

Opening a dealership requires a great deal of capital and resources. Additionally, car buyers will normally gravitate towards the more established dealerships and to earning a reputation like Open Road Auto Group requires years as a reputable dealership. According to www.cpapracticeadvisor.com, it costs $100,000.00 to $200,000.00 just to open a car dealership. This includes: Business registration, business location, accountant fees, business license, auto dealer bond, insurance, inventory, payroll, and other miscellaneous costs. 

Substitute Products/Services: Low

Most auto buyers have only the options of buying from a dealership or buying through a private party.

Bargaining Power of Suppliers: High

Open Road Auto Group deals largely with new cars. Unlike used car dealerships, cars are purchased directly from the manufacturer. Therefore, suppliers will have a higher bargaining power than most industries. 

Bargaining Power of Customers: Medium

Customers have the option of choosing many alternative ways to purchase a car. Although this fact drives the bargaining power of customers higher, Open Road Auto still provides among the best car prices in the area which results in a moderate bargaining power of customers.

Competitive Strategy

Open Road Auto group strives to provide competitive pricing by using NADA.org to determine market value. NADA.org is widely used by many dealerships and sets a standard to what cars can sell for. Additionally, Open Road Auto Group will try and beat any competing dealership sticker price by at least $500.00. It is worth mentioning that stickers are placed on the car in order to draw potential customers in, and Open Road Auto Group advertises online at a discounted online price in order to reward online browsing. This promotes an overall cost leadership among other dealerships in the area. 

References: 

https://www.nada.org/WorkArea/DownloadAsset.aspx?id=21474837349

https://www.cpapracticeadvisor.com/firm-management/news/12362973/cost-analysis-of-opening-an-auto-dealership#:~:text=The%20total%20cost%20of%20opening,dealership%20you%20will%20be%20opening.